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Thread: Affording that First Dream Home

  1. #1
    Join Date
    Mar 2012
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    4,990

    Default Affording that First Dream Home

    » Affording that first, dream
    home
    Straits Times: Fri, May 18
    Is the dream of home
    ownership still within the
    reach of young people in
    Singapore?
    THERE'S nothing quite like the
    subject of property to get the
    average Singaporean excited.
    Discussions on home prices,
    movements of the property
    market, unit sizes and even
    interior decoration dominate
    all manner of daily
    conversations, from
    Parliament debates to coffee
    shop talk.
    Singapore is a home-owning,
    house-proud nation. This has
    its roots in a decision made by
    the first generation of leaders
    more than 50 years ago -
    when Singapore gained self-
    governance - who saw the
    value of home ownership.
    Former prime minister Lee
    Kuan Yew, for example, saw it
    as a way to create a sense of
    national belonging in a
    volatile era, when the country
    was coming to terms with self-
    governance and later,
    independence.
    Mr Lee wrote in his 2000
    memoirs that it was important
    for Singaporeans to own their
    homes: 'I believed this sense
    of ownership was vital for our
    new society, which had no
    deep roots in a common
    historical experience.'
    Over the past five decades,
    the Housing Board has been
    the cornerstone of that
    fundamental philosophy. The
    HDB was established on Feb 1,
    1960 - shortly after Singapore
    gained self-governance in
    1959, and amid a housing
    crisis. Then, much of the
    population was living in
    crowded squatter settlements
    and unhealthy conditions.
    The HDB, taking over from its
    predecessor, the Singapore
    Improvement Trust, was
    tasked with housing the entire
    nation. It built 21,000 flats in
    under three years. By 1965,
    when Singapore gained
    independence, it had built
    54,000 flats. Within 10 years of
    its formation, it had the
    housing problem under
    control.
    Today, it has built more than
    one million flats, housing over
    80 per cent of Singapore's
    residents.
    The homes have become a
    social safety net, an asset that
    has become a hedge against
    inflation and a store of
    retirement income for home
    owners.
    In Singapore, about 88 per
    cent of households own their
    homes, with most owning HDB
    homes. This is a notable
    achievement for a city once
    overrun by slums. In
    comparison, rival city Hong
    Kong's figure is much lower,
    at about 52 per cent.
    Singapore's public housing
    policies and projects have also
    gained international
    recognition. In 2010, the HDB
    was awarded the 2010 United
    Nations-Habitat Scroll of
    Honour Award, the most
    prestigious award of its kind,
    which recognised the housing
    board for 'providing one of
    Asia's and the world's
    greenest, cleanest and most
    socially conscious housing
    programmes'.
    But as successful as HDB has
    been in the past, other more
    complex issues have surfaced
    in recent years that have
    prompted a national
    discussion and review of
    current housing policies.
    In last year's General Election,
    housing emerged as one of
    the hottest topics, with the
    public voicing strong opinions
    over the affordability of
    homes, particularly for newly-
    wed, first-time home buyers.
    Singapore's property bull run
    of the past five years -
    bolstered by the country's
    strong economic growth - had
    seen private and public
    housing prices soar to historic
    highs.
    Home buyers were unhappy
    about either being priced out
    of the HDB resale market or
    repeated failure in balloting
    for a new flat from the HDB.
    The question that young home
    buyers were asking was: How
    can we afford that first,
    dream home?
    Well, the good news is that
    homes are still affordable -
    depending on what you are
    aiming for.
    The Government's promise -
    and the HDB's mission - is to
    provide affordable housing for
    the masses.
    Newly-weds earning below $
    10,000 in combined monthly
    income can apply for the
    HDB's new Build-To-Order
    (BTO) flats, which are
    typically priced around 30 per
    cent cheaper than comparable
    resale flats in the same area.
    The income ceiling was
    recently raised from $8,000 to
    $10,000 to enable a larger
    number of buyers to purchase
    flats directly from the HDB.
    The move was seen to help in
    drawing demand away from
    the red-hot resale market.
    The HDB has in the past year
    launched new projects at least
    once every two months across
    a wide range of locations. BTO
    flats, however, take around
    three years to be built - so
    young buyers have to be
    prepared to wait for their
    home.
    Prices of new BTO flats have
    been kept stable in the past
    year, and are generally
    affordable for young couples,
    going by widely used
    standards.
    The internationally recognised
    threshold for housing
    affordability is a 30 per cent
    'debt-to-service ratio' (DSR) -
    the proportion of monthly
    income that goes into paying
    the mortgage. (See box for a
    worked example.)
    Another widely used
    affordability measure divides
    the price of a home by a
    potential buyer's annual
    income.
    The affordability picture
    changes if the couple opt for a
    resale HDB flat instead.
    The Government does not
    control prices of HDB resale
    flats, which reflect market
    demand and supply. Many
    resale flats are in mature
    estates with many amenities,
    and in locations more central
    than new flats. The result:
    Most HDB resale flats are
    more expensive than new
    flats.
    Buyers of resale flats also
    need more cash reserves to
    pay for their homes, as sellers
    typically demand a cash
    premium - called cash-over-
    valuation - over and above a
    flat's valuation.
    According to the HDB's latest
    figures, the median price of a
    four-room resale flat ranges
    from $384,000 in Yishun to $
    655,000 in Queenstown.
    First-time buyers have to do
    their sums carefully to
    determine if they can afford
    it. If the couple can qualify for
    an HDB loan, the upfront
    payment needed will be 10 per
    cent; for those who do not
    qualify and have to get private
    bank loans, the upfront
    payment is a heftier 20 per
    cent.
    For a $655,000 flat, this is $
    65,500 or $131,000
    respectively, which can be
    paid in cash or with one's
    Central Provident Fund.
    Those who have just joined the
    workforce would have to work
    for several years before they
    can come up with those kinds
    of savings. Those earning
    below $5,000 monthly will also
    find that their DSR will shoot
    past 30 per cent (explained in
    the worked example) if they
    set their sights on pricey
    resale homes.
    Those with loftier ambitions of
    getting into the private
    property market after
    working for a few years might
    need a further reality check.
    Latest figures from the
    Singapore Real Estate
    Exchange (SRX), which
    collects price data, shows that
    the average per square foot
    price of a non-landed private
    home is $1,061 for the first
    quarter of this year.
    This means a three-bedroom
    condominium unit of, say,
    1,000 sq ft will cost about $1
    million, of which about $
    200,000 is needed upfront.
    It is no wonder that parents
    often advise their children to
    start with a new HDB flat. You
    need to live in it for at least
    five years before it can be
    sold or rented out.
    Existing housing policies
    favour the family unit - only
    married couples are allowed
    to buy new flats from the HDB
    or qualify for grants. Singles
    cannot buy new flats directly,
    and have to be above 35 years
    of age to purchase HDB resale
    flats.
    For young buyers who are
    neither married nor have a fat
    bank account as yet, there are
    other options to consider.
    They can live with their
    parents or other family
    members, or rent a place.
    More may be doing so: Figures
    from the 2010 Population
    Census show a rise in the
    proportion of one-person
    resident households in the 25
    to 29 age group, from 10 per
    cent in 2000 to 28 per cent in
    2010.
    Such an option might cost
    more, but offers more
    flexibility on flat type and
    location, as well as the
    freedom and independence
    that many young people
    desire today.
    Ultimately, the path to your
    dream home can be achieved
    in several ways. Arming
    yourself with intimate
    knowledge of the property
    market, housing policies and
    financing options is the first
    step to getting that first
    dream home.
    [email protected]

  2. #2
    Join Date
    Mar 2012
    Posts
    4,990

    Default Special mention

    For young buyers who are
    neither married nor have a fat
    bank account as yet, there are
    other options to consider.
    They can live with their
    parents or other family
    members, or rent a place.
    More may be doing so: Figures
    from the 2010 Population
    Census show a rise in the
    proportion of one-person
    resident households in the 25
    to 29 age group, from 10 per
    cent in 2000 to 28 per cent in
    2010.

  3. #3
    Join Date
    Oct 2010
    Posts
    2,094

    Default

    your singapore..
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

  4. #4
    Join Date
    Oct 2010
    Posts
    1,420

    Default

    Quote Originally Posted by carbuncle
    For young buyers who are
    neither married nor have a fat
    bank account as yet, there are
    other options to consider.
    They can live with their
    parents or other family
    members, or rent a place.
    More may be doing so: Figures
    from the 2010 Population
    Census show a rise in the
    proportion of one-person
    resident households
    in the 25
    to 29 age group, from 10 per
    cent in 2000 to 28 per cent in
    2010.
    Who say no real demand for MMs?

  5. #5
    Join Date
    Jun 2011
    Posts
    444

    Default

    Quote Originally Posted by sh
    Who say no real demand for MMs?
    many more unaccounted ones from those who are renting but still use their parents' home as official address.


    "If there's going to be a war in Singapore, I'll be the first out of here," my male Singapore friend said. "Why should I risk my life to serve the country?"

    "Your house leh?" I asked.

    "Hm...."

    The idea of "home ownership" which the government sold to us is fantastic!

    Quote Originally Posted by sh
    Who say no real demand for MMs?
    many more unaccounted ones from those who are renting but still use their parents' home as official address.

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