September
2009
HDB and CPFComments Off
Something about the recent statement about the fact that HDB is affordable for the singles in their 30’s irked me. Link here http://singaporeenquirer.sg/?p=4619. Of course his idea of “affordable” is that the person in question spends 29% of his income on housing.
But even his calculations are misguided. In order to be eligible to buy a flat, and get the subsidy of $11k that Mr Yap mentioned, the person in question need to be over the age of 35. But when a person is over the age of 35, the amount of his CPF contribution that goes into his ordinary account ( and as such can be used to finance his HDB mortage) goes down. For the example given, the in the ordinary account to be used monthly is $525.41, not the $575 that our Deputy CEO mentioned.
Of course the difference is only $50, andf it doesn’t make a difference to the calculation of 29% arrived at. But either our HDB head is not familiar with his own policy with regards to singles, or more likely, he is not familiar with the fact that contributions to the ordinary account goes down with age.
And who can blame him, such small variations to his own cpf account, would hardly matter to him. For someone of his pay scale, he is likely to have hit the CPF contribution ceiling anyways, and the amounts in his CPF accounts are inconsequential to him. Reminds me of a certain minister of state who once claimed that he receives his CPF statement monthly
Only someone like the person used in the example making a measly $2500 a month, would notice that his disposable income is smaller by $50 and would fall futher that as he grows older.
Notice also that in the example used, the 3 room flat in question is $200k, a simple search on the HDB site would tell you that the median 3 room flat cost $240k ( average of about $246k). Even if we take the benchmark of affordability to be 30% ( and 30% is highly debatable), that would definately blow it.
What we have then is that, someone of average income, would need to take the maximum of loan of the maximum tenor, and still not be able to afford ( assuming 30% benchmark) an average 3 room flat.
