New flats affordable for most buyers, says Mah

[corydorus]

I think is misleading. CPF is still our retirement/investment money. And the percent amount is controlled by the government.
Here's my calculation if i understand correctly.

When we use CPF money to pay for housing, we need to return the original taken plus the 4%(for the Initial ceiling) you would have gained from CPF have you not. This works out a span of 8% gap compound you have to pay long term when you sell. This is expensive loan of your own money.


Cory

[lonewolf]

You only need to pay back the deferred interest when you sell your flat.

If you are happy and contended with what you have and see no reasons to sell, then you dun need to pay back the deferred interest.

[corydorus]

This is what i mean. The "deferred interest" original should have been given by CPF to your CPF account. Now you have to pay it out yourself. And you are paying higher flat cost (of the 4%) using CPF money which Mah seems to think is his money.

Isn't this a double whammy as is simply pushing us to higher debt structure ?

[EnSabahNur]

Actually, there are some ways to monetize the flat. As d.o.g.-san has pointed out in another thread, there is always the 'sell and rent' option. There's also the sell and downgrade option. To get rich, one must take some steps that aren't with the majority.

I believe the reasoning is right but those options usually aren't palatable to most people. No offense meant to anyone but that's also probably why most people remain 'most people'.

how would sell and rent be superior to buying and living in the flat?

[setan]

After hearing my CEO (MBT) speech, I extremely worried on my investment in this company. It's time to seriously considering of an divestment.

[Big Toe]

This thread jolted my noodles suddenly.
This 2.6% we pay for HDB loan using CPF may not be such a good idea after all.
Add this to the 4% which we owe to ourselves on housing withdrawal from CPF and suddenly
it doesn't seem like a good deal after all.

As for affordability of HDB flats, it's up to individual interpretation.
Ah mah seems to think it perfectly fine to pay it off over 30years.
A more innovative scheme would be to have 2 generations pay off the loan.
I.e. Buy a flat at 30, by 60, the kids would already start working and
they could stay together take over the loan. This would further improve bonding, and thus deepening the
relationship between 2 generations.

[piggo]

Yup, that's why I say we should up the GST to really help the poor;a few percentage points obviously doesn't help much with the widening income gap. Loosen immigration further to boost economic growth/productivity and so we can push asset prices to new heights. It's definitely worth it to pay a premium for a perpetually appreciating asset.

[kazukirai]

Actually, there are some ways to monetize the flat.

how would sell and rent be superior to buying and living in the flat?

Hi EnSabahNur,

Actually, my point was about monetizing the value of your flat. This was made in response as to whether a flat that is the primary residence should be considered an asset.

If we want to consider whether sell and rent is superior to buying and living in a flat, I think the factors I would consider supportive of such as situation to be:
- an overheated property market such that the returns from selling the flat and investing the rest of the proceeds outweigh the potential rise in future home price appreciation.

One must remember that money is fungible (It doesn't matter whether your monies are tied up in CPF or not. Some people might disagree but I could always also argue that giving up SG citizenship and migrating will allow you to extract those monies so it's not exactly 'locked up'. How many peopel will think of going to such extremes though?) and that it's about maximising returns.

Having said this and as I've said earlier, I don't think it's very palatable to most people.

[EnSabahNur]

Actually, there are some ways to monetize the flat.

how would sell and rent be superior to buying and living in the flat?

Hi EnSabahNur,

Actually, my point was about monetizing the value of your flat. This was made in response as to whether a flat that is the primary residence should be considered an asset.

If we want to consider whether sell and rent is superior to buying and living in a flat, I think the factors I would consider supportive of such as situation to be:
- an overheated property market such that the returns from selling the flat and investing the rest of the proceeds outweigh the potential rise in future home price appreciation.

One must remember that money is fungible (It doesn't matter whether your monies are tied up in CPF or not. Some people might disagree but I could always also argue that giving up SG citizenship and migrating will allow you to extract those monies so it's not exactly 'locked up'. How many peopel will think of going to such extremes though?) and that it's about maximising returns.

Having said this and as I've said earlier, I don't think it's very palatable to most people.

Oh ok, thanks for clarifying that, guess I read it wrongly.
Actually Musicwhiz mentioned another way of monetizing it is to rent out one room while you still live in it. But as you mentioned, its not an option many people will choose.

[Musicwhiz]

One must remember that money is fungible (It doesn't matter whether your monies are tied up in CPF or not. Some people might disagree but I could always also argue that giving up SG citizenship and migrating will allow you to extract those monies so it's not exactly 'locked up'. How many peopel will think of going to such extremes though?) and that it's about maximising returns.

Having said this and as I've said earlier, I don't think it's very palatable to most people.

Actually, if you think about it, that's the reason why the Government is "driving" so many Singaporeans out of their own country.

To monetize our flats, get back our CPF (or what's left of it), get away from the stressful kiasu life and a host of other reasons.

Sad but true.