Avoid feast and famine in housing

[pianist]

not only raiding future generaton monies, today paper also mentions abot mean night temperature in singaporea has risen by at least 0.5 degree celsius due to massive concrete building, air-conditioning n population increase.

[Musicwhiz]

I guess in 10-15 years we may see the ill-effects of the current poorly-planned housing policy, with many couples having to cough up substantial amounts of cash to service their loans.

Many couples probably rely on their parents to help them out with either the down-payment or monthly installments. When their parents pass away, the burden will be on them fully, which means their DSR would increase. With many more people taking up 30-35 year loans, this can only mean working till one's twilight years, with no hope of early retirement.

[CY09]

Hi,

Just being curious what is an acceptable DSR for housing? While this ratio varies across individuals, I am curious to know what is the range of DSR which forumers find as acceptable for housing repayments in Singapore.

Thanks

[wsreader]

...Many couples probably rely on their parents to help them out with either the down-payment or monthly installments. When their parents pass away, the burden will be on them fully, which means their DSR would increase. ...

If the parents are wealthy enough to help finance the children's housing, when the inevitable happens, the children will inherit the wealth in one lump sum, no longer by monthly amount. That's when refinancing is possible.
Can also sell the parents' properties.
The above-mentioned is more possible for wealthy and/or small families.
As we have an ageing population, inter-generational wealth transfer will become more common over the next 30 years, as the bulk of baby boomers reach their old age. Baby boomers tends to be wealth accumulators as they had lived through harder times. Hopefully, the young ones have enough financial wisdom not to reach a state where housing is "affordable" when measure against the wealth accumulated by two generations.
I am not optimistic, because the money inherited must go somewhere.

[guru]

Hi,

Just being curious what is an acceptable DSR for housing? While this ratio varies across individuals, I am curious to know what is the range of DSR which forumers find as acceptable for housing repayments in Singapore.

Thanks

Believed 35% of combined income?

[propertyinvestor]

Property values of Housing Board (HDB) flats have gone up by up to 20 times and these increases will go on as housing developments take place.

Former Minister Mentor Lee Kuan Yew said that even though Singaporeans have been able to own a home through HDB, owners should think twice before selling their flats for a profit because prices will appreciate in value over years.

"Everybody owns their own homes and the value of their homes go up as development takes place,” he said in a Channel NewsAsia report. “Some are unwise enough to sell their homes, thinking they can buy another one, they then find they can't and have to rent a flat.

“But those who held on to their homes, I've seen their property values going up, five times, 10 times, 15 times, 20 times. This was the plan which we had from the very beginning, to give everybody a home at cost or below cost and as development takes place, everybody gets a lift, all boats rise as the tide rises.”

[snowcap]

DSR should not be fixed. We should look at absolute numbers, and also factor in the family needs and spending habits. Examples:

1. Household income of $4000. Family size of 2 adults, 2 children, 2 elderly. Monthly expenses $3900. Pay housing loan thru CPF only ($0 cash servicing mortgage) 35% DSR is probably too high.

2. Household income of $4000. Double income couple with no kids. Frugal and takes public transport (no car loan). Monthly expenses of $2000. DSR of 50% is probably acceptable.

3. Household income of $20,000. Family of 2 adults and 2 children. Monthly expenses $8000. DSR 60% is comfortable.

The bottom line is that if we increase the delta between what we earn and what we spend (either by earning more or spending less), we can invest the difference, or be comfortable with a higher DSR.

[CityFarmer]

Hi,

Just being curious what is an acceptable DSR for housing? While this ratio varies across individuals, I am curious to know what is the range of DSR which forumers find as acceptable for housing repayments in Singapore.

Thanks

General guideline is 1/3 income used for debt (mainly housing loan), so DSR should be around 30-35%

When i bought my house 10 years ago, it is much lower since i had a car loan then.

[etan]

Say, I intend to give out a small sum of (some) money to one of my children. Is it better to give them cash or is it wiser to help pay off the balance hdb housing loan from bank which incurs higher interest than hdb.

This will help to save some interest over some 20 years. The interest saved can thus be used for other purposes, e.g buying ETF which can generate some dividends. They are not financial savvy.

[WolfT]

Say, I intend to give out a small some money to one of my children. Is it better to give them cash or is it wiser to help pay off the balance hdb housing loan from bank which incurs higher interest than hdb.

This will help to save some interest over some 20 years. The interest saved can thus be used for other purposes, e.g buying ETF which can generate some dividends. They are not financial savvy.

My father's idea of inheritance is for me to earn a million sgd before 35, then he will will his money to me. This is his logic of making sure i learn the hard way and comfortable in managing large amt of money.
He start telling me when i am 18 and sure enough, i prepare for it and become a saver and not some wastrel like i am suppose to be...