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HDB's pro-family policies & runaway prices are hurting genuine homeowners.

Disillusioned with trying to purchase a HDB flat

The following is a comment by one of our readers in response to an earlier post on TOC, “HDB flats – “affordability will always be there”, says Mah.” We publish it here without edits.

Disillusion

A few years ago, just 4 month shy of my 35th birthday which marks my eligibility to purchase a 3 room HDB unit under the single scheme, I had viewed a 3 room flat at Marine Parade with a full sea view for an offered price of $200,000.

Just when I hit my birthday, the en bloc frenzy started and ever since the asking price for a 3 room in Marine Parade is at least $280,000 and above going for as high as $380,000 for a corner sea view unit.

It has been 3 years and the seller asking prices had not let up, a sign that free market is ever propelling the valuation upwards. The agents told me this is caused by PR buyers and rich investors who had cashed out on their en bloc sales hence are buying the HDB for rental income purposes. This had led the market valuation to be irregular and unfairly spiked by this small group of investors.

The social ramification is that sincere and frustrated buyers had been unfairly priced out. To add to the woe, singles are not eligible to buy direct from HDB and those earning above $3000 are not eligible for singles grant and the cheaper HDB loans. I wrote to an MP years ago expressing the singles plight. I was willing to take a bank loan and forfeit the singles grant but I sought to have my purchase made direct from HDB which is much cheaper than in the open market since I was financing under a single income.

Unfortunately I was told the government policies are pro family and to allow singles to buy subsidize housing may result in social ills. I was shell shocked and till this date I still do not understand how increased home ownership by singles is a societal problem. It is ironic that young couples are now highlighting their same plight as well.

Isn’t it telling that the ‘’reason’’ told to be years back can no longer hold water since the pro family couples themselves are getting the same hit albeit them financing the unit with a dual income. For whatever HDB policies and their rationales in place, they certainly isn’t functioning at least for these two classes of people, the singles as well the young middle income couples, given the ever increasing HDB prices.

I cite these real cases I know :

Two families who lived in a 4 room unit that both families co-owned (they are relatives) had decided to split for space and privacy reasons. One of the childless couple in their 60s had balloted 6 times for a studio unit unsuccessfully and finally gave up. (This is another problem which is a separate topic of discussion altogether.)

They recently bought a 30 over year old 3 room unit in a very original condition for $255,000 including COV. After paying the agent fees on both transactions, stamp duties, legal fees, renovation fees etc the whole unit came up to a whopping $300,000! So even if one was not to select a unit from the matured estate (Marine Parade, Queenstown etc), the average cost of a 3 room unit is still not considered affordable for the majority middle income class.

For a single to take say $150,000 loan at age 35 would mean they are tied to a mortgage till their 50s or 60s, a lifestyle choice many certainly do not want to have. One often misses this other critical point , that is the value that one pay for a flat now say $300,000 will effectively cost an estimated $350,000 to $400,000 after serving say 20 to 30 years of interest. For this couple, they are left with almost nothing in their CPF except for the minimum sum of which half is pledged to the property I think.

I cite another friend situation whose parents are married but not leaving together. She is a single and staying with one parent. Both parents are co-owners of the house. One parent is renting a room at $500 a month and my friend had been paying the rental for the last 8 years so she would have spent close to $50,000 by now.

She does not have an option because she was not at an eligible age to buy in the earlier years and whilst she is now she feels that the current spiked price does not warrant the hefty loan she has to lock herself in for many years. She wants so badly to buy a unit for her other parent and is bearing the guilt that she is not able to provide a haven for her other parent in their golden years. At the same time she knows it does not make financial sense to keep forking the rental cost. These are the citizens out there who are in real conundrums and dire straits.

I hear so very often in newspapers reports of investors snapping up condos and then profiting from the sales. The recent one I heard was someone who bought a high end condo in the east at over $700,000 before it was officially launch. We speculated that he has connections hence had received exclusive prelaunch invites. He later sold the condo for 2 million. It makes me cringed each time I hear rich people out there getting richer through property speculation whilst the commoners are struggling so hard to have a small piece of a haven from a land they call their home.

I have no qualms of people getting rich but what frustrates me is that HDB pricing tails behind the private pricing hence all these speculation has a spill over ill effect on the general public housing pricing. Short of being disillusioned by this free market ballooning which never seem to burst, the alternative lifestyle choice that had crossed many minds is migration. I’ve known friends who had left the country and I still often hear this as an escape route whenever lamentations of high mortgage loans and education stress surfaced. It may just be a matter of time before more will take the plunge and find a new haven somewhere else.

I know a reversal will create negative equity for many but for the sake of our generation the prices cannot keep going up. The government is the only authority figure who can intervene in the free market and bring to par what is irregular by renewed public policies. The US government has done it to save their corporations. Perhaps it’s time the Singapore do so to save their citizens.

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