Thursday, December 10, 2009

Are HDB flats really that affordable?

Recently my new colleague asked me how much is my flat's monthly payment as he wants to get an idea of how much his will be if he is successful in the balloting exercise for flat in Punggol.

He remarked that what I am paying is expensive. I was shocked because by any current standard, what I am paying is really low.

Since the flat he is balloting for cost 2.4 times more than mine and the amount he can use from his CPF account for the downpayment is similar to mine, by simple calculation, even if he stretched his loan period to the max, he is looking at 3 times of what I am paying and practically 60% of his pay. This time he was the one who was terribly shocked.

'So why did the minister said that HDB flats are still afforable?' he asked. I can sense the confusion and disbelief by his facial expression. To quote the X-Files, the truth is out there.

With CPF, you may not be paying a single cent of cash for your flat but your CPF may be zero after each monthly deduction. Come retirement day, you've got nothing to draw out from.

Some say we can sell the flat then and make use of the profit for retirement but if this trend continues, we will be spending bulk of that sum for a new flat. We are back to square one. What does that left us with?

6 years ago, my flat cost 2.4 times lower than the current price HDB is selling. Has my pay increased by 2.4 times? I wish!