Cash strapped because retirement funds spent on chasing after the illusion of property ownership

Cash strapped because retirement funds spent on chasing after the illusion of property ownership

I was chatting to a British friend of mine recently. He had just visited Singapore and sang glowing praises of how wonderful and rich the city state was. Commenting on how new and gleaming all the buildings were, he was under the impression that everyone was rich or at least middle classed in Singapore.

When I thanked him for his compliments of my country and remarked that there were concerns at the growing income divide between the different “classes” of Singaporeans, he quipped: “doesn’t everyone get provided with a free flat from the government?” It makes me wonder, is this the impression that Singapore gives to the world? That we provide free government housing to all?

From where this friend, let’s call him M, is coming from, social housing in the UK is either free or heavily subsidised. Given that Housing Development Board (HDB) flats are marketed as government housing and based on the situation in the UK, it is, of course, understandable that M would assume that it is the same in Singapore. Given that most Singaporeans live in HDB flats, I am not surprised that he is impressed with the notion that every Singaporean is provided with a government flat!

He appeared shocked when I explained that HDB flats are sold just like private houses with mortgages and down payments required. Some of them can go for as much as SGD1million in the resale market! I further explained that despite paying down payments and mortgage payments, the flat is not freehold and in fact only has a 99-year lease! In other words, most Singaporeans are paying for their HDB flats as if they were acquiring private property under the guise that it is provided for by the government!

I have nothing against the HDB scheme. I just think that the way it is marketed could lead to misunderstanding of what it actually is which is why I find it ironical that Minister for National Development, Lawrence Wong has commented that most Singaporeans are asset rich but cash poor. The fact that they are cash poor is most probably true. The notion that they might be asset rich is however open to debate. Can owning a flat for 99 years that you have spent most of your working life paying for be considered asset rich? Not to mention one has to sell his or her flat to obtain the retirement funds needed to survive the remaining years in the country, as  p

Detractors will argue that the HDB scheme is no different from 99-year private condos. But that is besides the point. Private developers are clear that they are there to make money. HDB flats are however supposed to help every Singaporean own a home – there are altruism and social well being in the equation! Therein lies the difference! I cannot help but think that Lawrence is disingenuous in advising people on how to pick the “right size” flat when in reality, the reason why some people may be cash-strapped is because they have spent all their life and cash chasing after the illusion of property ownership.

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