Financial Consultant: Only households with monthly income of
more than $7,500 can consider buying BTO project in Queenstown
December 17, 2009
According to Financial Consultant Mr Wu Jiawan, only households
who earn at least $7,500 monthly can consider buying a 5-room flat
in the new BTO Dawson project at Queenstown.
Even then, besides depleting their CPF, they still have to fork
out a minimum of $600 monthly to finance the mortgage loan.
Mr Wu was referring to the two of the four BTO projects launched
by HDB lately which are located in Queenstown.
Prices will range from $373,000 to $549,000 for a four-room flat
and $532,000 to $664,000 for a five-room flat for both Dawson
projects in Queenstown which is more expensive than some
condominiums in the suburbs.
It is not known how HDB arrives at the figures, but they are
pegged to the sale price of resale flats in the vicinity.
A four-room resale flat in Queenstown was sold a few months ago
at a record-high price of $653,000 to an Indonesia PR.
Mr Wu made a quick calculation for Lianhe Wanbao:
“Assuming the mortgage loan is 80 per cent of the flat’s
price or $528,000, after factoring the HDB interest rate of 2.6 per
cent, one still has to pay $2,116 monthly for 30 years.”
Mr Wu urged first time home buyers to buy an affordable flat
within their means to prevent over-stretching their finances as
they still have to put aside other expenses for their children and
retirement.
There is a salary cap of $8,000 for Singapore couples buying BTO
flats for the first-time.
Going by Mr Wu’s calculations, couples buying these five-room
flats will surely deplete their CPF for their housing loans and end
up with little or no money for their retirement.
Furthermore, there is no guarantee that they will continue
earning the same amount of money for the rest of their lives and
they will be plunged into financial difficulties should one of them
gets retrenched.
Despite escalating prices of public housing, HDB is adamant that
HDB flats are within the reach of ordinary Singaporeans.
MM Lee Kuan Yew said recently that the government will try its
best to keep HDB flats “affordable” for Singaporeans even as prices
continue to climb.
He did not elaborate specifically on what the government will do
to help Singaporeans achieve this aim.
Other ministers are nonchalant about the concerns of
Singaporeans too with some even claiming that rising prices are
good for Singaporeans as it helps to generate “wealth” for
them.
However, they failed to realize that the asset value of HDB
flats can only be unlocked when they are sold and the seller may
have to fork out more cash to buy another flat in such an
inflationary market.
When Singaporeans complain that they are unable to get a flat of
their choice, National Development Minister Mah Bow Tan chided them
for being “choosy”, saying that he cannot build the flats near the
city or without second storeys.
At this rate the prices of HDB flats are going up, some property
analysts even predict that flats in Queenstown may fetch over $1
million in ten years’ time.
Mr Wu felt that even if the flats are valued as such a price,
there may not be any buyers as few Singaporeans can afford a flat
more than $1 million and those who can will be buying
condominiums.
The prices of HDB flats have sky-rocketed in recent years with
resale flats hitting a record high in June this year, contributed
partly by the relentless influx of foreigners into Singapore.
As the public housing market is controlled tightly by the
government, its prices can be manipulated easily by increasing the
demand while keeping the supply low at the same time.
The high cost of HDB flats is one of the reasons deterring young
Singapore couples from having more children thereby triggering off
a vicious cycle in which the government has to turn to more
immigrants to boost the nation’s declining birth rate.