The Online Citizen

What's it like to own a house with a meagre $850 a month?

March 09
23:16 2012

~By: Leong Sze Hian~

I refer to the Straits Times article “He earns $850 and owns a two-room flat” published on the 9th of Mar 2012. (See HERE)

The question on our minds is whether one can pay off the HDB loan. After the $40,000 Additional CPF Housing Grant on the $99,220 flat, the HDB loan is $59,220. On a 30-year mortgage at the HDB Concessionary Loan rate of 2.6 per cent, the monthly repayment is $237.

At age 33, his CPF Ordinary Account (OA) contribution is $179. However, his OA contribution will decrease to $140, $127, $87, $76 and $23, at age 36, 46, 51, 56 and 61, respectively. Therefore, his CPF OA shortfall to pay for his monthly mortgage may increase gradually from $58 initially to $214 at age 61.

At the current rates and after deducting his employee’s CPF contribution, his take-home pay is only $706. With so little income to support his family, it may be difficult for him to pay for his monthly mortgage CPF shortfall in cash.

Of course, with the likelihood that his pay may rise in the future, there seems to be a viable solution in sight. However, if he belongs to the category of Cleaners, Labourers and General Workers, their median gross wage dropped from $1,277 to $900, over the last 10 years. So, it is unlikely that his pay will increase sufficiently to offset his increasing mortgage cash shortfall.

What is the likelihood of mortgage default?

As the sole breadwinner who may be unlikely to have any savings as a reserve to fall back on, for such lower-income workers, the probability of job loss, pay cut, sickness or accident, may be relatively higher than others.Therefore, the likelihood of him defaulting on his mortgage over the next 30 years may be high.

He may have no CPF to retire

In any case, utilising almost all his CPF, may render him broke without any CPF savings for his retirement.

Allow CPF for rental

Perhaps a better solution to his housing needs may be to allow his CPF to be used to pay for his $44 HDB monthly rental.


Writer's Note: It was reported in the article that the monthly mortgage is only $83 which can be paid fully from his CPF. On this basis, the HDB loan is $20,732 – probably using $38,488 from the household's $40,000 holdings. I would like to point out that what this case illustrates is perhaps not so much that a family earning $850 can afford to buy a HDB flat, but rather the unique situation that only a $20,732 HDB loan is required.


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  • Ah Boy

    Obviously the MIW are just using this as smoke screen, deflecting how the housing policy has allowed housing prices to climb 50% in 5 years.

  • Libran

    Mr. Leong, thank you once again for debunking the PAP ministers and the msm, who are increasingly looking looking like conmen out to scam the unwary public. Your numbers shows beyond any doubt that it is imprudent for a person earning $850 to buy a 2- room flat. The PAP ministers and the msm, as usual, only tell us half truths.

  • not all Tan are the same

    Mr Leong, don't you think Singapore should follow the example of Mumbai? Let Singaporean build slums just like those in Mumbai, even if you are earning $200 a month you can have your landed property. Isn't that great?

  • prettyplace

    Good analysis Mr Leong. I just came out after reading a study by NUS Prof Tilak on housing in Singapore.
    Your reminder comes timely.  Singapore seems to be heading downwards in terms of housing.
    We are only factoring those who want to buy a new home & not those who are selling their homes due to financial problems they face at hand
    PM LHL seems to be distracted but I am sure the 60:40 gave him a wake up call to rectify the many problems we face or he is going to see the country crack down into disarray his father built.

  • Marko Ramius

    The fact is that it is possible to have a roof over your head with an income of less than $1000 in Singapore.  I am not sure it is entirely the government's fault that Singaporeans fail to upgrade themselves and land themselves in low-paying jobs, something that the government has been warning about FOR YEARS.
    Call me insensitive but this is meritocracy in play here.  Recently some Americans that I met were amazed that most of us OWN our first house rather than rent them as most Americans do.  How is our housing policy flawed then?

  • fpc

    even with a grant of 40K, the leasee had to purchase an insurance from CPF to insure the flat. That insurance should cost around 100 dollars a year.

    Do you think these 1000 sgd home income person can foot the insurance? if he can't, what happens should something happen to him? his wife go live on the streets is it because after the 2  bought the flat, they forfeit their chance to rent from HDB.

    Tharman needs to wake up!

  • fpc

    leong is back in form.
     
    This is another great one from him.

  • HDBTaiTai

    I believe his wife is also working since the article reported that he and his wife have about $40K in their CPF accounts. This would mean that their monthly household income is more than $850. Imo, to claim that he owns a 2-rm flat with his income is inaccurate. 

  • notalone

    I find it very CHILDISH for the government to glamorise a policy that enables a low income earner to own a HDB flat, and yet ignoring the fact that the same low income earner will face the bigger problems of making ends meet on the daily basic necessities like food and transport.
    These low income earns may own a HDB flat but cannot survive paying the basic expenses in our daily life, and then end up dying of hunger… good policy meh?
    Poor foresight and narrow vision of the top people.
    Either they are delibrately making Singaporeans look stupid, or they are fooling themselves and running away from the irreversible dire situation that they have created from past years.
     

  • yada

    Mr Leong seems to have forgotten this man has been working and would have consistently contributed $179 in his OA per month, and would have earned the 2.5% year on year. if he had started work at age of 20, he would have a sizeable amount.  Not to forget, his wife may have worked before they got married.  This is the reason why they would have a household cpf of 40k.  The point here he is helping himself by continuing to work.  Mr Leong made a point about him losing his job of $850, please, all he needs to do is go pack up, and walk into any restaurants. they are always hiring….:)

    and the next point is , please, what we , as a society should be doing , is to encourage this group of people to upgrade themselves, not hope they forever stay this way of earning $850.  The govt provides grants for them to upgrade.

    LAstly, by encouraging this group of people, to go for rental flats, Mr Leong is encouraging this group of people not to get out of the poverty cycle.  Have a heart for these people! –PLease.

  • FanaticD

    Also, the article is misleading. the man earns $850 but they never mention how much the wife earns. given that their CPF is about 40K. the wife should be earning more than $1,000 a month. under such condition, the household income is more than $1000. the article states he earns $850 but never ever mention the household income. a misleading article. also,note that he did not get the $60K grant as said by government but only $40K. so somehow, something is hidden from us. to get 60K, household income needs to be lower than $1,500 to get the 20K. so given that he got 40K, that means household income is higher than $1,500. do the calculations and see the fact

  • kei1309

    *shrugs*

    One does not simply own a flat through a single income in Singapore.

    UJELLY TOC?
     

  • nbcbkpkb

    no one is getting to the crux of the issue, which is that singaporeans are grossly underpaid, whilst our basic cost of survival is massively inflated.
     
    i could be a cleaner in america, make a basic of $3000 a month, and buy a house at $40000. THIS, my friends, is the difference.

  • notalone

    @yada
    How do you define 'poverty'?
    Will our upgrading policy pull every single soul in Singapore out of your definition of 'poverty'?
    There are people who are not ambitious, not highly educated, diligent in their work, love their family, appreciate their friends and colleagues, with optimistic nature, have a long time job, earning $2500 and living in a 3 rm flat.  But these people find it hard to imagine they will have a good retirement.
    Are these guys considered living in poverty?
     

  • http://www.gilberttants.per.sg Oogle

    From the calculations you can see it is definitely flawed and misleading to show a $850 income when you should consider both the hsband and wife. Who are you trying to bluff to justify your assumptions? I for one would rather rent than buy if I have such low income, becos with that money sustaining myself is already such a big problem in Singapore, you just cannot make ends meet, who is stupid enugh to buy a flat?

  • Torpedo

    This is one of the those instance where I support what the govt has done to help those that are not so well off. If push comes to shove, the couple can sell off the property after 5 years and make a tidy profit on the house. Based on current property prices, they can make at least $150,000. It is almost unthinkable for such windfall to come to people with similar background in other countries. So the mortgage repayment computation is a pointless exercise.
    For me, the real question is how many people who need help can really enjoy this benefit. Is it 0.1% or 0.001% of the population because this is the first time I have heard it. 
    Also, for those who benefit from such schemes, how do we stop them from cashing out after 5 years, thereby defeating the original purpose of giving them a chance to own their own homes.

  • Ah Seng

    Out of the thousands of Singaporeans applying to buy 2 room HDB flats, they managed to find one who was selected and earned a $1,000 or less.
    Anyway, I feel happy for Mr Mohammad as all of Singapore will be watching closely to see if he is able to meet his monthly mortgage payments.
    Should for one reason or another, default takes place, this will backfire very badly on all those concerned for highlighting this case and making claims that those earning $1,000 can afford a HDB flat.
    And if default takes place just before GE2016, they could be heavy losses of votes as well.
    I guess it seems that it is in the interest of all those parties to ensure that the mortgage payment is made by hook or by crook.
    Maybe a new job with better pay will be offered now.
    I certainly hope so, as I and the rest of Singapore watch closely as the case unfolds.
    Singaporeans want to be updated on this case just before GE2016.
     
     
     
     

  • z

    it would be interesting to find out how helpful all the upgrading courses are. do they simply keep u employed? do u see your salary rising and if so by how much over what period of time?
    will age ever get in the way of your being employed? there r quite a lot of angry pple on a different story who make very clear that after 40, staying in a job is touch n go and getting one tt pays well is like hitting 1st prize in 4D.  
    from murmers here n there, these upgrading courses are not at all the silver bullets that they r made out to be. there is no guaranteee u will have a job or a better paying one after going for these courses.

  • Rodolfo

    I am not sure what the PAP sought to achieve by trumpeting this in such a big way in the news. While it is possible people could pay for a basic public housing property over a number of years, I think many people can imagine the tough life these people must be going through. I don't think this sort of publicity did the PAP any good. The PAP could do with more media savvy.

  • mice is nice

    talk about living dangerously, financially speaking. one should note that any mortgage not fully paid puts one at risk of a default, the risk is just amplified over the loan period, the longer it is, the riskier. therefore, it cannot be said enough that homes are not affordable as the future is never certain.
     
    if really that affordable, people dun need grants, discount or any form of gimmicks that seek to reduce the "usual price". its anyone's guess if the prices of such 2-room units will or will not increase in price at a rate that far outpaces any increase in real incomes.
     
    in all fairness, i do hope that future housing projects include a mix of 3 different home sizes in a single block (be they slab or point) to foster inclusivity. for example:
    –> 2, 4-rooms & EC cluster combination per block?
    –> 3 & 5-rooms cluster combination per block?
    –> 3-room & mansionette combination per block?
     
    such a combination facilitates social interaction by design. & in designing communal spaces, one ought to put social needs above esthetics, with the many condo styled projects often found today. & its by design that older estates still command a premium. maybe by design things can do by bringing things up-to-date?
     
    ^.^

  • not all Tan are the same

    Singapore government is very stupid, why make it possible for the lowest income to own their roof? Is stupid to please everyone, only PAP is doing it.
    Which country in the world would enable the lowest income to own their roof beside Singapore? HK? Japan? US? Taiwan? Malaysia? Please…. in all the other countries either they sleep on the street or build their landed property on slums.

  • not all Tan are the same

    Our deputy PM should point out how our rich live, tell them our remisier king live with a trophy wife all by themselves in posh condo behind Orchard Rd because he needed the whole car park for his sport cars.
    What's the point of mentioning the lowest income? Those areas are exclusively blocked for the opposition to score political points.
    Grow up please PAP, be smart like the WP.
     

  • elhong

    Singaporeans are seriously fortunate that you can own a home so easily, with low interest rates and having the ability to pay the mortgage using your CPF. I’m a Singaporean and I’ve been living in New Zealand with my husband and two children for the last 10 1/2 years. We only managed to buy our first home 2 years ago because a 20% deposit was required for the home loan, & the floating interest rate is 5.6%, fixed interest rate being around 7%. We don’t have the option of paying the mortgage using our superannuation either. Which means, if you don’t have at least $1500 per month to go onto a mortgage, forget about ever owning a home. You guys have it good.

  • Razton

    It is like telling us, see? 850 can buy a flat, so sin bother us citing that u can’t own one with your 1k salary

    Absolutely no planning from govt

  • eaglefly

    LOCALS ARE REAL DAFT !!!!
    TO BELIEVE PROPAGANDA OF THE GUTTER'S KIND……
    FIRST OF ALL THIS 2 ROOM FLAT IS NOT EVEN WORTH 40K, LEAST TO SAY 100K, MORE CHEATING COMING YOUR WAY FROM THIS GOV.
    60K SUBSIDY ?, SINCE WHEN YOU GET SUCH A THING CALLED, "SUBSIDY", MORE JOKES TO COME……….
     
    WHEN MOHD DECIDES TO UPGRADE, HE WILL HAVE TO PAY BACK, REPEAT, PAY BACK, THAT 60K IF HE BUYS A NEW FLAT, SO ARE THEY GIVING YOU ANOTHER SUBSIDY ?
    LOCALS ARE REAL DAFT AS MM SAID,
     
    SUBSIDY ?
    SUBSIDIES ???
    TRY ROBBERY !!!!!!!!!

  • mel

    @ elhong

    Do u honestly think home loan interest rates will remain low for long? Since u are comparing.. How much does a landed 3000sqft house in NZ cost? In SG its anywhere between 1.5million to 2million depending on location. Wat sort of house can 1.5million sgd buy u in NZ?

    How much does a worker at macdonalds in NZ earn per hour? $12nzd per hour or more? How abt in SG? Are unskilled workers entitled by law to OT pay if they work longer hours? How much does a construction worker in NZ earn?

    If u can answer those questions and still say tat generally the poor has it good in SG.. Then pls come back to sg..

  • Somethingwrong

    Back in 1988, my basic pay was only $715. I applied for a 5-rm HDB flat. I got it, fully paid-up for it in 2004. Why is the govt glamorising a salary of $850 but only a 2-rm flat today?? What changed? I think all of us know the answer.

  • Jack

    "Migrants to New Zealand considering living in Auckland may discover that the average house price is approximately NZ$339,000 however another new immigrant who is thinking of purchasing a property in Southland may discover the average price is only approximately NZ $125,500."
     
    http://www.nz-immigration.co.nz/cost-of-living/housing.html

  • Jack

     
    Home loan affordability improves again
    Monday, 27 February 2012
     
    “First home buyers are increasingly using their KiwiSaver nest eggs for deposits and banks are competing hard to lend up to 95% to help them get into the market,” said Rhonda Maxwell, a spokeswoman for Roost Mortgage Brokers, which sponsors the Roost Home Loan Affordability report from Interest.co.nz.
     
    http://www.scoop.co.nz/stories/BU1202/S00918/home-loan-affordability-improves-again.htm

  • Jack

    A Kiwibank Welcome Home Loan is only available for owner occupied properties and may not be used to purchase an investment property, for refinancing or for construction purposes. You must not already own a home. No deposit is needed if the home you want to buy is worth $200,000 or less, or a deposit of 15% of the amount over $200,000 is needed (which may be gifted) if the home you want to buy is worth between $200,000 and $280,000, based on a registered valuation or the purchase price, whichever is lower.
     
    http://www.kiwibank.co.nz/personal-banking/home-loans/home-loan-options/welcome-homeloan.asp

  • Ray

    Leong's article on FSC dated 28th Feb 2012 is deceptive,
     
    On 28th Feb 2012 Leong Sze Hian wrote a deceptive article, linking extra funding to Family Service Centre to distribution of money to the needy. He purposely manipulated and hide the fact that FSCs also provided other form of services to the needy.  His deceptive article tarnished the image of our social workers, potraying them as money suckers. These social workers are ordinary Singaporeans who are serving the 99% of us.
     
     
    Attempts to get him to reply and be transparents is futile.  Leong like to pose questions but dodged when being questions on his deceptive article.
     
    My advice to readers is not to accept his article blindly but do your own research and ask questions, because writers like Leong Sze Hian and also those from MIW are afraid when we readers are critical as they could not fool us.
     
     

  • Jack

     
    Government assistance
    If you can afford mortgage repayments but don't have a deposit, you may be eligible for a Welcome Home Loan. With this scheme you can borrow up to $200,000 with no deposit, and up to $280,000 (now up to $350,000 in some areas) with a small deposit, to buy a home. Lending criteria are different to standard loans. The scheme structure is particularly well-suited to extended families. 

    If you join KiwiSaver you may become eligible, after three years of membership, for a first home deposit subsidy. The subsidy will be $1000 for each year of membership after 2007, to a maximum of $5000. A couple both in the scheme could therefore get up to $10,000. The subsidies became payable from July 2010.
    http://www.sorted.org.nz/home/sorted-sections/mortgages/how-much-can-i-borrow
     

  • For our Future’s sake

    I'm sorry. To me, this is just another B.S. by the Govt using their controlled media to highlight that even with $850 a mth people can afford a 2 room flat..typical action by the Govt to prove they are right.Well, you can fool only the 60.1%, but not 100% of us.
    You need to live the life of this people for the next 1-2 years to see if they can really afford to live in Singapore earning that kind of salary…."Theorist!"

  • Saycheese

     
    Torpedo10 March 2012

    <This is one of the those instance where I support what the govt has done to help those that are not so well off. If push comes to shove, the couple can sell off the property after 5 years and make a tidy profit on the house. Based on current property prices, they can make at least $150,000.>
    If you are a Singaporean, you already hit double jackpot – buy a flat with 60k or 40k and profit 150k in 5 years and pay $1 tax for $4.25 payout. And 39.9% of daft Singaporeans are voting for more opposition?

     

  • Jack

    Mr Leong's articles have been truly informative and helping to open up a lot of people's eyes.
    More and more Singaporeans are becoming aware of the BS taking place because of the tireless and altruistic work of Mr Leong.

  • Son of a Dict

    $1K a month can buy one of the most expensive public housing?
    Does this not encourage all foreigners sweeping floors to jack up the demand?
     

  • Bullshit Exposed

    Thanks Mr leong for exposing Tharman's bullshit. Those who have lived in Singapore even for a year will know there are many contingencies you will have to cover (sickness, job loss, hawker price increase, transport price increase  etc), and that it is impossibe to survive on $850 a month !  maybe Tharman's fringe benefits have them all covered ! 

  • Jack

    I'm not sure who the sycophants are trying to fool?
    Sell your 2 room HDB flat and make $150K?
    So you're 2 room HDB flat which you bought for say $100K is now worth $250K?
    So what do you do after you sell your 2 room HDB flat?
    Live on the streets?
    If you're 2 room HDB flat goes up for $100K to $250K, a 3 room HDB flat would probably go up from $150K to $350K.
    Would a person earning $850 a month be able to afford a flat worth $350K?
    So the sycophants are suggesting that he sell the flat and live on the streets with his wife and children!
    And if a 2 room HDB flat goes up to $250K, would the children of the owner be able to afford a 2 room HDB flat if their salary was $850 or $1,000 for that matter?
    Would any young couples be able to afford HDB flats if the prices kept skyrockeing for that matter?
    What next? Build 1 room HDB flats that cost $150K?
    I'm not surprised that more an more Singaporeans are waking up and voting opposition.
     
     
     
     
     
     

  • The Call

    Anything that has been done or can be done to better the lot of the disadvantaged should be welcomed. By all means, suggest tweaks to the gaps to make them better but the time and efforts should be spent thinking of these than just finding faults. I support pointing out the gaps (faults) but what is needed are how to make them better; not rantings and expletives! At it stands, I suppose these people can still choose to rent rather than buy if they so wish.
    Some may not agree but I think we have got one of the best public housing system in the world. I would have called it the best if not for the runaway escalating prices. The HDB under MBT must shoulder the bulk of the blame for this. More should be done in this area to make them affordable; most especially for the first time young people wanting to get married and found a family. As a first home, such (young) people should not expect a four or five rooms HDB flat unless they are willing to pay for it. It could be a two or three rooms HDB flat. The aim must be solely to encourage and enable them to get married, to give them a roof over their heads, to start a family. It must be VERY CHEAP. It must not be seen as a financial investment but can be coverted into one with a top-up sliding scale sum if it should be sold e.g. the first 10 years in the event such people want to upgrade to a bigger or better home.
    Asking such people to "pay back" as @eaglefly said above if/when Mohd decides to upgrade, to me at least, is not wrong. The aim must be to provide special assistance and affordable housing to those who need them most (at different stages of life and for different groups in need) and not when they don't need them any longer for ultimately, it's the people's money.

  • Eugene

    The loans provided for 25years actually ends in paying twice or more the value of an already high listed HDB price.
    The HDB had mercilessly confiscated the flats of those Singaporeans who had fallen through the cracks. Their CPF savings have been taken away together with their house. Some 10,000 families have been subjected to this merciless act by the papies. Ms Grace Fool had a direct role in enforcing the confiscation without exploring some creative ways have letting these poor Singaporean families own their house.
    The stone hearted papies are now coming up with unusual explainations of being inclusive and all the crap. Down with the papigs and their bootlickers,
     

  • Libran

    If the HDB has been encouraging people to buy flats on such a basis, and giving out 90 pct financing and 30-year mortgages, then I'm afraid to say, we have our equivalent of subprime housing crisis looming. Mr. Leong, thank you for pointing out the danger signals to us. Those who fail to heed this warning, will pay a heavy price for it.

  • Jack

    I think it is wrong to compare Singapore's housing policy with other countries.
    For one thing, and a very important thing at that, Singaporeans don''t own their HDB flats!!!
    The are just leasing it. Albeit a 99 year lease.
    It other countries, you own your home for an eternity.
    And the second thing, is that the majority of Singaporeans just 'own' a pigeon hole in the sky.
    In New Zealand, as someone mentioned previously, you own your home and the land that it stands on.
    A world of difference I might add.
    And thirdly, your 'ownership' of that HDB flat comes with an endless list of restrictions……….which only serves to point out that you don't really own your HDB flat.
     
     
     

  • The Call

    @Jack ~ So by the same token I suppose we also do not own our cars, our watch, our shoes, our clothes, our pens… and the list goes on because all these have a "life span"? In life, we make best do of what we have and can afford.
     
    New Zealand is such a vast country; I shatter to think what if all land and houses in Singapore, especially HDB, are freehold or 999 years leasehold: will our children's children and future generations to come be able to buy a HDB flat or house, and if yes, at what price?

  • Jack

    These sycophants are proving to be rather daft.
    If you've paid up for the car, it is yours for keep.
    If you've paid up for your HDB flat, it goes back to the HDB after 99 years.
    That is why after some years, its value starts to drop drastically.
    But let's show some intelligence by comparing apples with apples.
    We are comparing housing in Singapore and the rest of the world.
    Not a house and a car in Singapore!!!!
     
     
     
     

  • The Call

    @Jack – Since I am a daft, can I ask you whether a car which as you put it is "yours for keep", how long does it last and where can I keep it forever? Please forgive me for asking because I am daft and not as clever as you.

  • gw

    Financial genius Leong says: Perhaps a better solution to his housing needs may be to allow his CPF to be used to pay for his $44 HDB monthly rental.

    But wait! What if he then loses his job, or retires? All his CPF money would have been used for rental. He has no flat to fall back on.

    This is the sort of stupid argument that TOC puts forward. It's very harmful because it misleads people. Imagine telling people that they should use their life savings to rent property? How is that better than using their life savings to invest in a home?

    Worse still, TOC accepts that people can lose their jobs or retire. In that case, if they had used up their CPF savings for rental, then those people would have nothing to fall back on. Thank goodness, the govt has helped people to manage their financial planning by (a) forcing savings through CPF and (b) encouraging home ownership by making affordable flats. Then, when people retire, they at least have something of value to retire on.

  • lim

    Mr Leong bases his assumption that the worker's wages will remain at $850 permanently from age 33 to 51. That would be a concern. Any Government that allows wages to remain static for 20 years will not be in Government.
     
    In real life cases, even a cleaner's wages will rise. Mr Leong should instead base his assumption on the rate of increase of the bottom 10% which he is well aware where to get that % from. 

  • Ray

    REBUTTING LEONG SZE HIAN’S ARTICLE,
    Rebuttal No 1: Owning flat is better than renting a flat
    In a study by Rowe and Stegman (1994) on impact of home ownership on low income families,  it was revealed there are many social benefits in allowing low income families to own a flat. It gave them a sense of pride,  and having an impact on their socio responsibility towards the community as a whole.  In an article by Donald Lambro, it was stated that home ownership means hope for the poor.
    Can Leong Sze Hian provide any evidence or study to support his claim that renting a flat is better? Or did his claim came from out of the blue in his mind, without any proper study?
    Contrary to Leong Sze Hian’s claim, I would like to point out that what this case illustrates is perhaps not so much on rather the unique situation that only a $20,732 HDB loan is required, but the commercial services rendered to the buyers by HDB,  which commercial banks will avoid to provide.
    Rebuttal No 2: Instilling fear in us?
    For families facing financial difficulties, HDB provides various form of assistance for servicing the mortgage loan.  You can go to http://www.hdb.gov.sg/fi10/fi10325p.nsf/w/MLFinAssist?OpenDocument
    Such services are absent or hardly provided by loans from the commercial banks. Readers should be interested to know that during economic crisis, commercial banks do recall your loan if the property value goes below the loan amount. This will put the house owners in difficult financial situations.

    Will commercial banks provide housing loan in the first place to low income earners?
    Will commercial banks give out a loan of $19,000 to be repaid over 30 years?
    In cases where there is a default in payment, will commercial banks prefer foreclosures or reduce the repayment amount for the borrowers?

    The answers to all the above is “No”. But HDB assisted to provide such loans and where a default occurs, foreclosure is not one of the first few options to be implemented.
    Rebuttal no 3: Flat taken over by HDB automatically when owner die?
    What if the owner die, get incapacitated etc? HDB provides insurance under the Home Protection Scheme. I quote from the HDB website:  Should the insured member become permanently incapacitated or die prematurely before age 65, the CPF Board will pay the outstanding housing loan based on the amount insured under the HPS.
    What Leong Sze Hian has been doing is to show the imperfectness of our HDB system. Can Leong Sze Hian show any government housing system worldwide that is perfect? Our HDB system is better than most other developed countries, although the high property prices and small living area are 2 main things which I disagree on as the masses are affected.  Are we worse off than other countries?  In the United States, up to 200,000  military veterans are homeless after their service in the military end. In Australia where you have strong welfare and supports for the poor, there are still some homeless people which you can easily find. If you’re in Sydney, just go to the High Court building near Hyde Park in the evening, and see the homeless sleeping in cardboards.
     
    Singapore is not perfect and we have plenty of room for improvement, be it from lowering property prices for newcomers to better living environment. I’ve seen relatives who lived in one room rental flat and moved into a 3 room flat which they proudly owned. Leong Sze Hian should not pass a sweeping statement and judgement on the poor that they should live in rental flat, nor should he just criticised blindly without checking facts. It shows how bias and shallow the article is.

  • Roidney

    2 room flat cost $99,220
    CPF housing grant $ 40,000
    He & his wife CPF account has $ 40,000 as what he claimed. Wonder how he & his wife accumulated this amount of $ 40,000 in their CPF account as he is the sole bread winner + odd job worker.
    If this is true, then $ 99,220 – S$ 40,000 (CPF Housing grant) – S$ 40,000 (he & his wife CPF) = $ 19,220
    Instalment over 30 years, that's can be affordable.
    Just my 2 cents comments.
    Vote wisely, Sorry seems to be the hardest words, come 2016. Trust yourself to handle your life & money than leave them to all the yaya tua lam pa papayas.   

  • yada

    @Roidney: its not difficult to find out how he accumulates 40K in his OA.  Mr Leong had pointed out he contributes $179 to OA.  HEs now 33 yo, assuming he started work at 20 years old. There you would have $179x13X12 = $27924. This however, has not included the 2.5% year on year CPF interest paid out.  Add that on, you would have a much higher figure.  On top of that, a possibility his wife may have worked before getting married.  This explains where the houseold CPF of 40k comes from, as detailed in the original article.

  • Alan Wong

    See how cunning or crafty they are if they try not to mention the wife's income just to prove the point. 
    Remember some years ago some university dean or professor in some kind of  LKY Institute was trying to defend the Govt by saying there are no poor people in Singapore.  
    And now see how they seem to be slapping themselves just to prove a point that an income of S$850 can still support the purchase of a 2-room flat in Singapore.
    So now are they are not simply admitting there are indeed poor people in Singapore and PAP has been fucked up all these while with their policies ?
    See the problem of trying to lie to the people all this while and now they are just got off guard by their own complacency.

  • fpc

    selling the 2 room after 5 yrs, what happens after that?

  • stable

    why made so many calculations to show this & that? The fact is simple: THERE'RE SINGAPOREANS EARNING $1000 OWN 2-ROOM HDB FLATS! Who care how much they pay every mth?

  • Azenable

    Can someone tell me how much dose Macdonals pay? less then 850 a month? 

  • Tan Tiong hock

    Most people struggled in the first few years (initial period) when committing to buy first property. There are various variations of factors for each one. His family prevailing conditions meant that no strain on initial outlay. However as with most people, things are expected to improve from prevailing conditions, and hence the decision to commit to the purchase, rather than continue to rent.
    If we dont view things in positive light, then one would be unlikely to progress. Pls think positive.
    Dont allow those negative pessimists to dictate or misguide the way forward….they are the last people who would reach out to assist your case. It is never their intention to do so, despite claiming to argue for the less fortunates.
     

  • Joyce

    @yada: it is interesting to note your assumption that he started work at 20 years old, and now he is 33. His salary has not increase for the last 13 years??? Then something is definitely very worng with our system of helping the low income to do better.

  • Libran

    People have short memory. A lot of people seem to have forgotten that during the Asian Financial Crisis in 1997, property prices in Singapore crashed by 30 – 40 pct. and didn't recover to the pre-crisis level until probably 2011 as we went from one crisis to another (dot. com crash, 9/11, stock market crash following, SARS, etc.). A lot of people are talking as if the property market is a one way street, i.e. only up, which was the basis of the subprime scam in the U.S. and caused property prices in the U.S. to crash and almost brought on Great Depression  II.

  • Solution is short term fix.

    This kind of solution is a short term fix. The current govt's style is always the same: Do first. Cross the bridge when we get to it!!
    For the medium to long term, the real solution is to ensure these workers get a chance to acquire relevant skills as they get on in their jobs. Ensure that skill upgarding programs are as comprehensive as possible to cover workers from all strata so that no one will fall through the cracks.
    That has to be the message the govt should be sending out to this group of workers whose pay are at subsistance level. Make all upgrading skill programs mandatory for them (fully subsidised, of course) and that henceforth, can start to push their salary up.

  • aaa

    Seems that there is more than meets the eye here. ST article is BS-ing about  the guy owning a 2-rm flat with just $850 salary. His wife is earning a salary also — combined couple salary is more than $1,500. That's why it's important to tell the WHOLE truth, not just SOME truth.
     
    That's why they only got $40K grant, and not $60K grant. To get the $60K grant, the household income must be less than $1,500/mth. So this ST article is actually talking about a family with over $1,500 income staying in 2-rm flat. Big deal.
     
    Moreover, this husband & wife are still mortgagers, NOT OWNERS — the bank (or HDB in their case) still owns the 2-rm flat as collateral against their housing loan.
     
    Secondly, HDB buyers are NOT true owners. They are lessees. Even after finished paying your HDB loan, you do not get any Title Deed for your HDB flat. Becoz there is NO SUCH THING AS HDB TITLE DEED. You ONLY have Agreement For Lease document.
     
    Therefore in Singapore, only 15% of the population are true property owners — those private property (whether leasehold or freehold). The other 85% of population are short-term tenants or long-term tenants i.e. HDB lessees.
     
    The only special characteristic of HDB lease is that you, as lessee, is given the right to sell away your HDB lease to another prospective lessee, at higher price than you bought it. PAP allows trading of HDB leases on open market and letting market forces set the resale HDB leases. In the old days before 1980, you can only sell back direct to HDB at low price.

  • Black_Dot

    "That's why they only got $40K grant, and not $60K grant. To get the $60K grant, the household income must be less than $1,500/mth. So this ST article is actually talking about a family with over $1,500 income staying in 2-rm flat. Big deal."

    I am shock and terribly disappointed with the Straits Times for such a plain lie if what aaa express above is true. This goes to show how much the ST will bend just to blindly provide the propanganda voice for the PAP ruling party!
     

  • citizen

    It's something to start with.  In a few years when the silver tsunami has grown higher, these flats will be much sought after.  The owner can cash out.  By then, he should be earning more.  He can surely buy a larger flat and be better off.

  • Get Real!

    It is terribly annoying that this issue has been sensationalised.  
    (1)  It is a minority that will fall into this category
    (2)  If a married couple with low education and therefore low combined income, here this lifetime, it is there.  They have not been forgotten.
    (3)  The grousers who are beating the issue to death are NOT even in this very group that has received help from the government.  So don't sensationalise this and beat the government up for not helping.
    (4)  I dare say that is it the middle income who feel that they have been sandwiched, that they can't afford MORE of life's luxuries that they condemn the government for not helping.
    That said.  PAP – your objective to give assistance to the poor, to give them a roof over the head is a sound one.
    What you didn't do well, is to control the prices of PUBLIC HOUSING – our HDB.  You had thought that the explosion of value of HDB will win you the electorate.  Instead, your own citizens have been squeezed out of the property ladder because when Singaporeans want to upgrade from their existing HDB flats, they realise that they can no longer afford.  You let HDB prices go through the roof, and give false sense of wealth to the average Singaporeans.  When they upgrade to private properties, they are further financially stretched and began to realise that they in fact, have been reduced to a lower standard of living because they have to pay that higher mortgage.  Then they look at their CPF and cry murder, that they want to unlock that money.  You tell me you hadn't created this vicious circle.  You have time before the next GE.  You need to lower the prices of new HDBs to give Singaporeans their new homes.  Existing HDB owners will not be happy and they will curse and swear.  But hey, HDBs are not meant for speculation anyway!  Afterall, the overall property market has over-heated.  Be brave and let the property market correct. 

  • iROBrichCITIZENs

    citizen
     By then, he should be earning more.  He can surely buy a larger flat and be better off.
     
    ……………………….  
    are you goin to mploy the peasant$? what make you think the peasant4 are goin to earn more? you think ALL peasant$ liked pap mp and ministers..guranteed sured earned more?

  • Steven Lim

    What's the purpose of highlighting that I  don't own the HDB technically when I can actually realize the profit from something that's not "mine" when I sell it ?,   The other suggestion that we use CPF to pay rent to HDB instead of mortgage payments is not sound economics. Even my grandparents can understand that rent paid every month goes "down the drain" like water never to return, whereas money used as mortgage payments comes back years down the road through capital appreciation, and it can also turn out that you "stayed for free" after 10 years or so and still get a "bonus" on top of it! . I have that personal experience more than once! Also, I agree with Libran that property prices crashes and are never linear all the way up, but we are not talking about speculation here. It must be that you don't own your own property by the way you talk against it, or do you?

  • Torpedo

    Jack 10 mar
    I'm not sure who the sycophants are trying to fool?
    Sell your 2 room HDB flat and make $150K?
    So you're 2 room HDB flat which you bought for say $100K is now worth $250K?
    So what do you do after you sell your 2 room HDB flat?
    Live on the streets?
    If you're 2 room HDB flat goes up for $100K to $250K, a 3 room HDB flat would probably go up from $150K to $350K.
    ====================
    In the first place, they don't have a home and wouldn't be able to afford one in most other countries. So I think the policy if widely available is a good one and this is the first time I agreed with the govt in a long time. I am only skeptical about how widely available this scheme is.
    You obviously have not read my post properly. What I said was if mortgage payments is really tt difficult, they can sell their house for at least $150k profit. And If u compare to their current position, they r much better off because they hv one additional option.
    But more importantly is what the govt should do to prevent them from selling the house to realise the profit. I tell u if you are them, $150k is more money than they have seen in their lifetime and it is tempting to just cash out and move back to rental flat.
    On the 99 year lease, I don't know why it is such a big issue because many people have bought and sold 99 year leasehold at a huge profit in the current market. Braddel view with about 70 years left is still selling for much more than the original cost. So what is the big deal?

  • Complain king

    In other countries those earning $850 do not own a house…

  • Libran

    I think what we are missing here is that the PAP govt. has turned the HDB flat into a commodity to be traded and speculated in, They've done it for political reasons. They have used the HDB and their immigration policy to engineer a boom in the property market, and speculation got out of hand. They used 90 pct. financing, 30-year mortgages and reduced supply to trap the unwary public into buying highly inflated HDB,
     
    Where are the signs that the property market is inflated beyond affordability? In the early 1970's a 3-room HDB flat cost about $8,000 – $10,000, depending on location. Median salary of Singaporeans was about $500. HDB mortgages were 15 – 20 years. Today, a much smaller 2-room flat cost $100,000, median salary is about $2,700, and it takes 30 years to pay off the mortagage.
     
    Sometimes I wonder whether we are trusting the PAP govt. too much for our own good. Are they thinking more for themselves, or are they thinking more for Singaporeans?

  • Jack

     
    Complain king11 March 2012

    In other countries those earning $850 do not own a house…

     
    I can't stop laughing at the idiocy of these sycophants.
    Obviously very proud of the propaganda spew out by the running dogs of his master.
    Unahashedly boastful that a peasant in his master's domain can purchase a tiny 2 room HDB flat barely sufficient for even one person to live, let alone a family of four.
    How many Singaporeans earning less than $1K own their own flats?
    How many of those 2 room HDB flats were bought by those earning less than $1K?
    "In other countries those earning $850…."
    May I know which developed country are you referring to?
    Developed countries have minimum wages to ensure that all its citizens can achieve a decent standard of lving.
    Not so in supposedly developed 1st world Singapore.
    I am extremely disgusted and angry that these daft sycophants feel it is okay for Singaporeans to raise their families on $850 a month (before deductions) while their masters feel than less than $1 million a year is hardship for them.
     
    Sigh.
     
     
     
     
     

  • Jack

    "In other countries those earning $850…."
     
    Don't these fools know that children living in households with income less than $1K will invariably mean that those children will probably be starving everyday.

  • payout

    whats it like to open you mouth to say one can buy flat with 1k and face the backlash?
    'I wish I could turn back time~~~!', that song comes into mind.

  • prettyplace

    I understand the one room flat logic but
    What Happens When The Couple Has A Kid And Want To Start A Family.
    Its not in sync with national policies.

  • iVOTEahBENGaLEE

     
    Complain king11 March 2012

    In other countries those earning $850 do not own a house…
    ……………………….          
    is that so? hav you been to your asean neighbourin countries? a mayammer government clerk who earned $200/month can owned a colonial single storey bungalow while a phillipino custom clerk who also earned the same $200/month owned a porche

     

  • ngpy

    Someone is trying to pull a fast one by saying $850/= can buy a 2 rooms HDB unit and also support a family with 2 children. The above comments some illustrate which is almost impossible to support the family let alone servicing the HDB UNIT.  But it is a good idea to pull a fast one.
     

  • Gordon Freeman

    Why fight for this country?
    This government hoodwinks us into thinking we really own something (the flat) to make us believe that we belong in Singapore.
    The reality is, the flat belongs to the goverment.  They  are just leasing it to us.  We are just digits to be milked by them.  Brainwashed into thinking we have a stake in Singapore.
    Face it people,  they own the land, we are just subjects.  Like in the old days, when kings own the land and peasants work it.

  • Overseas

    Those who believes that 850 a month could allow you to buy a 2-room, then sell at a profit and revert to rental, think again. Do you think HDB will allow the rental? Those who think buying a flat with loan is better than rental, think again. U rent at 44 a month, any money u have in CPF earns 2.5%. U get free rice during festive season. If the govt seriously want to help these families, allow them to use CPF to rent. Why ask them to take out money, take financial risk that they don’t even understand? Why encourage them to speculate. Give them a safety net, job security, dignity, fair education opportunity that they can raise their children properly, not a society that encourage gambling and speculation.

  • Pingback: Behind the $83 a month HDB flat « Thoughts of a Cynical Investor

  • axt

    The other question in my mindis is how long did he take to build up the $40k in his CPF OA with a salary of $850?

  • Housing Plan Mistake

    first, the mistake was to import population.
     
    the next mistake was to involve public housing in this process, to skew public housing into becoming like private housing.
     
    now, the cover up process is to change rules, add subsidies to disguise all the mistakes.  But it's too late. We have seen the mistakes.
     
    I'm waiting for 2016 to put an end to all these mistakes. What about you?

  • http://TOCSingapore Edward

    @Black_Dot
    'I am shock and terribly disappointed with the Straits Times for such a plain lie ……… This goes to show how much the ST will bend just to blindly provide the propanganda voice for the PAP ruling party!'
     
    Last year, my letter to the ST was published but was edited to remove the phrase, 'the defeated PAP candidate for Hougang'. They didn't want the PAP look bad.
     

  • lim
  • everyone has a choice?

    @ iVOTEahBENGaLEE
    No point comparing with others; the lower income family must make own effort to get rid of the poverty circle. It takes time or possibly a generation. Instead of always wanting help, and fighting for monetary assistance, can not other monetary effort be considered. Ensure that their kids or lesser educated adults in the households be equipped with better education/skills to get rid of the 'give-me attitude'. There are many lower income families who take pride in helping themselves. We have to help these people, instead of those used to getting easy assistance. Teach the family how to fish, instead of giving fish only as they will ask for other dishes soon..
     

  • Really?

    Does this also mean that those who earned above $850 should just stop complaining about government housing policy? The implication seem to be why the big hooha about housing affordability when a guy like this can own a home?

  • NELVIN

    2rm HDB buy $100k sell $250k? Which idiot will buy at $250k?
    Think again.

  • Getlife

    STOP WHINNING AND COMPLAINING! GET A LIFE LOOSER SINGAPOREANS! WHAT IS WRONG TO STAY IN A 2 ROOM FLAT? IN HK, A 300 SQ FT FLAT IS FIT TO LIVE 5 PPLE…GET A LIFE, U ARE ALL BORN LOOSERS!

  • mice is nice

    Getlife,
     
    in Sg, getting a life is never good enough, wait people say S'poreans are 75%ers, so must always get a better life, & betterer & betterest life.
     
    what is wrong with 2-room flat? everything! since people were told to aim high & 3-room were the minimal standards, ideally people should afford a 4 room at least, now regress to 2-room where got okie? somemore need grants & over 15 years loan for a 2-roomer.
     
    if the 2-room like warehouse so big maybe wun complain, haa…  :D

  • dafuq

    Was the $850 fella selling "mee siam with hum" the other time round?

  • JustAnotherFella

    when buy hdb flat and taking concessionary loan from hdb, the entire amount in the OA accounts of the applicant couple will be used first to pay against the flat price, then the concessionary loan amount will take care of the outstanding amt after OA and whatever govt grants. hence the $83 monthly mortgage example is valid. however, uncle leong is right in pointing out risks like loss of income are not addressed, especially for low income earners.

  • nihon

    the people here r fighting for the poor n needy, n exposing the evil lies of 'affordability'; what is the actual cost of building a 2 room flat? is the 'grant' n 'subsidies' just a show? a transfer from finance to hdb?
    should not the lower income lease a hdb at cost?  if it a lease, why is there property tax?
    @Gordon Freeman n @ Overseas, thanks i see the light; we have been conned.
     

  • Foolishman

    What the gahment want to prove is that this man and his wife can survive on 850 per mth and still afford a 2 room flat. Yes. They will get their own flat after 30 yrs when he is 63. But there is little money for retirement.

  • condy

    this is so true… my friend just bought a nice penthouse in the CBD and he earns just $900/mth.  what a great country singapore has become, a low salaried worker able to own property….
    or is it just bullshi*t?  anyone who can say that a family can own a house with $850/mth is either lying straight to your face, or he is on something stronger than marijuana.
    tharman's on a hot streak of talking bull these days…. must be the high salary that he is on…. too much abalone and oysters are bad for you pal…

  • zero

    It has to be pointed out too, that the Straits Times article is wrecklessly trying to promote the concept of “affordability” using a rogue example of a man (Mohd Jasni) who already had $40,000 savings in CPF which constitute 50% of the price of the flat already.
    This absolutely ridiculous starting point makes the Stratits Times argument a BIG JOKE. It is like saying i can afford a Rolex watch when my income is just $100 a month. The secret is, i had past savings of $6,000. So in reality the Rolex cost much less because i draw on prior existing savings.
    The Straits Times example is a prime example of irresponsible journalism calculated to mis-lead and generate support for a specific point of view. It is unacceptable to say that anyone is able to afford an apartment of value X on a salary of Y, when, in the first place that person already has substantial savings of Z% of the value of X!!!!
    Q.E.D.
    zero

  • edmund

    there is a case of a employer of a foreign maid who was shocked to see the maid's house is twice the size of her flat when she visited the maid in the philippines.So who says earning less than $850 cannot own a property

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