Tuesday, April 27, 2010

Why the figures show HDB is affordable

I find it very amusing that the newspaper keeps highlighting this topic when it does not answer the main concerns.

Based on my recollection, I've not recalled any violent protest against the price of the a new HDB flat, obviously not taking into account Pinnacle@Duxton, Toa Payoh, and similarly good location HDB flats. High prices for HDB flats at a good location is understandable but some people compare a normal HDB flat to one that is built 20 years ago. 20 years ago, you still can buy something with 10 cents.

Therefore I find it very amusing that the figures for a new flat has been used to counter the argument that HDB is affordable instead of using HDB resale figures.

Now, a typical HDB 4-room resale flat can cost at least $400,000. Your household will need to earn at least a combined income of $7,600 to fund the monthly mortgage payment purely by CPF, assuming that you have made minimum downpayment and paying over a period of 25 years. I've got the figures by playing around with the calculators at HDB website. Is that affordable? I've not even taken into account that once you're above the age of 35, your contribution rates to the CPF OA account will start to decrease. You can refer to the table here for the CPF contribution rates.

I'm not looking at BTO HDB flats for a very simple reason. Not all of us can afford a private apartment or condominium. Do you know how super unromantic a guy can be if he proposes by asking "Do you want to apply for a HDB flat" ? And there's a big assumption that the couple is willing to wait at least for 3 years for the flat to be built, provided that they get a queue number that is in the 2 digits range. Has anyone taken a look at the recent queue numbers for the BTO exercises?

And they are wondering why the birth rate is so low.

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