Complete Property Market Updates of Singapore

March 24, 2008

Raising HDB income ceiling will hurt needy

Filed under: General — Propertymarketupdates @ 10:41 am

I REFER to Saturday’s letter, ‘ HDB ceiling doesn’t factor in late marriages’. Ms Xu Zhilin says the $8,000 income ceiling doesn’t consider the trend among Singaporeans of marrying late, resulting in a combined income that is slightly higher because they have worked for a few years. However, this ignores the point that there are many lower-income people in need of HDB housing, and Ms Xu is not alone in looking for a roof to start a family.

The critical factor in buying a flat is not how late you marry but how much you can afford to pay.

As one whose household income is half of hers, I have to say that if people like Ms Xu were allowed to enter the HDB market, prices would rise even further, putting housing out of reach of low-income earners.

The current rule is that four-room household incomes should be between $4,000 and $8,000.

I do not see why Ms Xu, with her $9,000-plus income, wants to compete in the market against a household earning half her income.

The same low-income people also face her stated problems of refurbishment and paying more for a resale flat, only their problems are double hers as they have half her income.

Prices of four-room flats now range from $200,000 to $300,000. If someone earning $4,000 a month must fork out $300,000 for a flat, there is little reason why someone earning $9,000 cannot afford a $600,000 flat.

Most people take 20 to 30 years to pay for their HDB flat. With Ms Xu’s income, she could probably pay for it in half the time, sell it for a profit, and move into private housing.

Ms Xu may not be a high flier, but having reached this level, her income is less likely to be static and thus she will have more options to move into private housing later. But incomes of the less well off are more likely to be static, giving them fewer prospects to move up. Where will they go when flat prices rise?

Ms Xu says she will have to spend the rest of her life either paying $100,000 more for an old flat or paying for a private condominium or executive flat. I say welcome to the real world.

Liew Lin Hai

Source : Straits Times – 12 Mar 2008

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