Wednesday, 21 May 2014

Wait long long: A view of public housing in Singapore (part 2).

Okay, so I am about to launch into the debacle that is the HDB flat - the shelter we all need that many of us are paying for with what the government still persists in calling our CPF retirement fund. The funds that, for both my husband and I, have been wiped down to zero dollars and will remain so for the next 20-over years while it services our HDB home mortgage. Some retirement funds, huh? I bet no one in other countries has ever heard of a retirement fund with zero dollars. (Thankfully, there is still money in the Medisave portion of our CPF, but those are strictly for medical bills and cannot be withdrawn to purchase daily necessities during our retirement years.)

Anyway, I don't want to receive any letters from anyone named Davinder Singh, so I'm going to stick to just talking about housing. For many years now, the Singapore government has been promoting the idea that our HDB flat is a top-notch investment. It has been said that even Singaporeans who earn only $1,000 a month should make it their lifetime aspiration to own one. In fact, my father, whose pay was indeed $1,000 a month, was pressured by HDB to purchase his current flat in the mid-1990s. Prior to that, he was simply a tenant of HDB paying a low rent of around $65 a month. Whenever repair works were required in the flat, all he had to do was to call HDB and they would send their workers down to do it free of charge. My father had rejected the purchase option the first time, but they came back to him a second, and then a third time. He was told by the HDB staff that should he not take up the option to purchase, he would have to pay increasingly higher rents. So, he purchased the flat even though he was already 60 years old at the time, thus wiping out his CPF savings. He continued paying for the home through his CPF until he stopped working 10 years later, which ensured that his CPF remained at zero dollars throughout. Then, he retired with an empty CPF account, and the mortgage payment has fallen on me. Now, I must state for the record that the mortgage amount is not a lot to me, so I am happy to continue paying for the flat - it is also my way of repaying my parents for how much they have done for me. However, I have always felt that it was wrong for the HDB to pressure my dad to purchase a home that, in my opinion, he could not afford. I truly believe that the idea that every household in Singapore must aspire to own a HDB flat to increase their "net wealth" (see the PM's National Day Rally Speech 2013) is a deeply misguided notion.

The HDB flat is home to 80 percent of the people in Singapore. Thinking of our home as an "investment" with a "wealth" that we can unlock any time, is tantamount to perilous financial planning. If you can afford a second or third property, by all means, invest in them to secure your financial future. But your basic shelter, your home, is not an asset that you can sell at will. In Singapore, where rental rates are high, if you sell your home, where will you live? Even a room in Seng Kang (around 20km away from the city centre) costs $600 per month, excluding the power supply bill. If you are forced to convert your HDB flat for cash, you are going to face serious problems finding a place to stay. The New York Times wrote a very good article titled "A House is a Home, Not an Investment". Everyone in Singapore who intends to buy a flat ought to be mindful of the points in the article. Investments in property are for those with cash to spare. Low-income families do not have enough money to invest in an expensive HDB flat, and they should not be compelled to make such an expensive investment by the Singapore government's housing policies.

Yet many Singaporeans continue to believe that the ownership of a HDB flat is an investment to aspire to for most Singaporeans, the middle income and even the low income. They wholeheartedly support the government's view that the high prices they pay for HDB flats are worth it with many even believing that eventually, they will reap the returns by being able to sell the flat at an even higher price. Will they really? If the prices go higher and higher, what will happen to the younger ones at the back of the queue? The beliefs have persisted, nevertheless, and I think there is one major reason for this....

Credit: Ben Soon
In the past decade, too many ordinary people in Singapore have benefited from having circumstantial good luck where property is concerned. I believe it is pure good luck and nothing else. These people did not purchase their flats with the intention to invest, unlike the real-estate multi-millionaires, they simply bought the flats so that they could have a place to live in. Then suddenly, as prices sky-rocketed, partly because of limited supply by HDB and population growth, they sold their flats and upgraded to much bigger homes. Now, many of these people are thinking, "Hey! This is great! I bought my flat for $100K and I sold it for $500K!"

I understand how they feel. Because when you have made a 400 percent profit from selling your HDB flat, or when you have made millions from flipping numerous properties at a time when prices were on the way up (I have met a taxi driver who has lived in three HDB flats in total. He sold each of them after a few years, and has earned a lot of money from the flat sales), it must go against your conscience to not believe in the pure sweet goodness of the government's housing policies. But sadly, the greed and speculation of the previous generation often leaves a path of unsightly obstacles for the next generation to traverse over.

There are two main issues that I can see in Singapore's housing policies. The first issue is, as discussed above, the idea that an expensive HDB flat is an investment worth making. More can be said on the issue. You can also read Kenneth Jeyaretnam's take on it here. Now I would like to discuss the second issue, which is the more immediate issue for young couples like myself and my husband: the BTO procedure and all the waiting that it entails.

As generalizing leads to inaccurate assessments, I would like to add a caveat. First, I am speaking as part of a married couple who are paying for the flat with our own money. We are not taking any money from our parents because they need whatever they have for their retirement. Second, we are speaking as a young couple who are first-time flat owners. We had never owned a property previously, and like many in our generation, never profited from any selling of property. So, if you belong to either of the above categories of people who have been given property by your parents or who have received benefits from having sold your property at a high price, this blog post is not about your experience.

No matter how bad a government policy is, if you or your family members are high income earners and all of you keep your jobs, you will always be able to live comfortably in Singapore. So, these are the impacts of the BTO scheme strictly for those of us who are not as well-heeled, and who are counting on the government's public housing scheme to start our families.


1. A minimum waiting period of three years. The first major problem is that the BTO entails what is, to me, a rather long waiting period. Although the HDB website says that the waiting period of a flat is at least three years, this is only if you have successfully balloted for the flat in the first place. The first time my husband and I applied for a BTO was in 2007. We had applied under the Fiance/Fiancee scheme for a place that was less than 1km (10 minutes' walk) from our parents' place. We thought that we would surely get the flat since we met all the requirements, but we didn't. In fact, among myself and my peers, I would say that 50 percent of us who applied for homes during the mid-2000s did not get the flats. (Here are some dudes from My Car Forum discussing their plight in 2007. The Internet always remembers, so the government can't pretend that it never happened.)

In fact, the problem persisted right till GE2011, with many newspaper reports on how the latest HDB sales launches were often oversubscribed (i.e. there were many times more applicants than there were flats). Therefore, those who wanted to marry quickly and who had the money would have to buy the more expensive resale flats.

I am aware, of course, that the government has been doing its best to have more BTO projects since 2011. I am not sure if things have gotten better, but there are fewer complaints from young couples the likes of those in the car forum above. I guess, like for many other things in Singapore, timing determines everything. Those who were lucky to be at the right place at the right time benefited, while those who reached marriageable age at the wrong time had to face more challenges. Nevertheless, life has turned out well for us. After the lack of success in our 2007 flat application, we waited a number of years by our own choice. And we have gotten a very nice home this year, 2014. Our relationship has grown stronger, and our financial status is more stable than it was before. On hindsight, I do think it was a blessing in disguise for us that we didn't get the first flat. However, biologically speaking, couples are better off starting their families in their mid-20s than later. This brings me to the next consequence.

2. Reproductive health problems. A couple of months ago, I wrote that we were having fertility issues. The problem has since been confirmed. As I have been going for check-ups annually, I know that this is an issue that only cropped up when I was 29-30 years old, which is not that long ago. Considering that there are no infertility statistics in Singapore, as mentioned in my earlier blog post, I doubt the decision-makers in the government, guided by economics facts and figures, ever considered the reproductive health of the women in Singapore when they made the housing policies that would affect our ability to settle down and have children of our own. While some of these problems may be reversible, thanks to better healthcare standards in Singapore, it will cost us, the citizens, a sum of money to tackle the issues.

A wise person once said, "The solutions of the present often lead to the problems of the future." Political leaders have to be mindful of that in making decisions. While it is true that many Singaporeans could live with their parents in the interim period while waiting for their flats, not every couple would have such an option. Many young couples still wish to settle down into their own homes. It appears that, where housing is concerned, the government had solved the problem of HDB sustainability but neglected the impact of its policy on family-planning. It is thus really ironic that while the wait for a HDB flat is forcing couples to marry later, the government continues to blame women for not wanting to start a family young.

3. Complicates the application for home mortgage insurance. Apart from reproductive health problems, adults in their 30s may also develop other health issues that will have to be declared when filling in the forms for the basic home mortgage insurance. Such insurance protects the occupants of the home should anything untoward happen to the payees of the mortgage, such that they are not able to complete the payment for the house. As you can expect, I have had to declare my health condition. It is not troubling me in any physical way at all, but it's there and it must be declared. My husband has also developed some ailments in his 30s that needed to be declared. If we are rejected from mortgage insurance protection because of these health issues, it will put our home at additional risk. Will HDB be able to help us appeal for home mortgage insurance? I doubt so. Insurance companies are known for going by the book. (As for those who continue to believe that health issues can be prevented with exercise and a healthy diet, sorry, I think mine is genetic. My mum had the same issue when she was younger.) It is just unfortunate again, a case of poor timing. But again, I can't help feeling that if we had gotten married when we were young and in good health, we won't have to face such uncertainty.

I believe as citizens, we have to be realistic, so I don't expect the government to provide me with a HDB flat at lightning-fast speed. But I think it's reasonable to have some expectations in terms of time frame, which has a huge impact on family-planning. I hope that the HDB can think of some ways to revise the current public housing system, so that young couples will not have their family plans thwarted because they have to wait many years for their new homes to be built. I don't want to be overly dramatic here, but lost youth can never come back. Parenthood is much more taxing when one is older.

There is more that can be improved upon in our housing polices, not least that of how the BTO process has led to more young people having their cash payments taken away when they give up their allocated flats. There are stories about that here and here. Of course, it is debatable whether we can really blame that on the system. But I think the low supply of flats contributes to rash decision-making. It's psychological - when people know that something is a limited edition, they will do whatever they can to get it. Profit-making companies design limited editions to get buyers into a frenzy. Our public housing system, whether intentionally or unintentionally, is designed in a similar way. Couples who know that flat supply is limited will try to ensure that they get a foot in the process as soon as possible so that they won't be left high and dry when they need a home.

I will attempt to write more when I have time. Of course, all the above does not take away the pride that my husband and I feel at having, finally, a place to call our own. As they say, there is always a silver lining. :)
Punggol Waterway Terraces II BTO Project: Looks great on this artist's impression, but takes four years to complete. A young lady who wants to get married in her mid-20s has to apply for a BTO flat at the age of 21, when she's most likely still a student. Should she and her fiance drift apart and change their minds after they start working, they will have to forfeit all of their previous cash payments to HDB, which can run up to more than SGD10,000 for each person. Credit: HDB.

No comments:

Post a Comment