Here an article from ST Forum.
Nov 6, 2006
Income ceiling for HDB flats may be too high
I REFER to the HDB's reply, 'Smaller flats for the lower-income' (ST, Oct 23) to Ms Phang Geak Lean's letter, '$3,000 ceiling stands in way of smaller flat' (ST, Oct 12).
It states: 'The household income ceiling is $2,000 for new two-room flats and $3,000 for new three-room flats... Households with incomes of more than $3,000 can consider buying new four-room or larger flats within their affordability.'
The HDB seems to be making the assumption that those who earn more than $3,000 can afford a four-room flat.
According to the HDB's July 2006 fact sheet, the price of four-room flats is from $131,000 to $182,000. Its latest offer of four-room flats costs $230,000 to $292,000 ('450 new flats in Geylang for sale'; ST, Oct 27).
Even if we assume one is able to buy the cheapest at $131,000, the monthly repayment on a 30-year HDB subsidised loan after paying the 10 per cent downpayment is $472.
This leaves a net 'after mortgage payment' monthly disposable income of $2,528.
This amount is reduced to about $2,250 after paying service and conservancy fee, utilities, television licence fee, telephone, CPF Dependents Protection Scheme, Home Protection Scheme and home insurance premiums.
Deduct $100 for school fees and pocket money for two children, and we are left with $2,150. Based on a family of six (couple with two children living with parents), the balance per capita disposable income is $358. If we assume food at $9 and transport at $4 per person per day, total food and transport will come up to $390 per person per month.
This means the family's monthly deficit is $192 ($390 - $358 x 6), assuming they don't spend any money at all on entertainment, holidays, learning activities, insurance, maintenance and repairs, and so on.
Those who are self-employed, and do not have employer's CPF contribution for workers, may have an even higher monthly deficit.
I suggest the HDB review its income ceiling eligibility for flats, because my example clearly demonstrates that some Singaporeans who earn more than $3,000 may not be able to afford four-room flats.
Denying them the purchase of a smaller three-room flat may lead to financial stress and very little CPF when they retire.
Leong Sze Hian
A good summary by Mr Leong.
I always wonder, why the gahment are limiting people on the choice of the size of their HDB flats? Even when I earn lots of money, doesn’t it meant I cannot choose to stay in a 3 rooms HDB flat?
Well the gahment argument is that HDB flat are “Subsidized” and are for poor people and those of you who earn lots of money can go get yourself a private properties.
I find there are several weaknesses in this argument.
Firstly, the in-come ceiling formula is incorrect. Look at Mr Leong case.
He is being “forced” to get a 4 room flats and he is barely surviving after paying the monthly loans and families expenses.
Secondly, I find that the cost of HDB flats are also grossly inflated. $131,000 to $182,000 for a four room flats? And remember HDB flats are meant to provide cheap housing for poor peasants.
The reason the gahment inflated the price of the HDB flats is to drained your CPF saving so they don’t have to pay you cash when your reach 55.
Well you need flat when u get married and you have to take care of your parents. (NO CHOICE).
So how can one survive?
Take the children out of the formula.
NO KIDS and Mr Leong is instantly $816 richer per month and he can save $624 per month far better then the $192 deficit now. That’s $7488 at the end of the year and he can even take his parent for a well deserved short holiday.
Maybe our leader can first look into the cost of HDB flats if they really are worry about the declining birth rates.