http://www.theonlinecitizen.com/2015/09/the-insidious-measurement-of-affordability/
This definition of affordability as presented by Khaw only benefits the government because HDB can earn the interest over prolonged durations while the CPF traps the accrued interest. It does nothing for the common man other than bind him to a financial commitment akin to modern slavery. As Singaporeans tend to follow the lead of the government when it comes to general decision-making, Khaw’s definition leads the people onto a wrong mindset that harms them more than anything else.
It is surprising that the PAP government, which is famous for calculating everything in terms of total cost, has time and again conveniently avoided all talk of the actual costs and implications of ‘buying’ a home over 30 years (when actually you are merely buying the right to live there for 99 years, and paying for this right for three decades). Even if there is good reason to dumb it down to monthly installment figures, then the responsible approach would be to consider a more muted mortgage period such as 20 years to define this affordability.
To use ‘maxed-out’ calculations and then call them affordable is ridiculous and irresponsible. It means that the buyer must remain employed at all times and cannot take up another job for a lower pay – because the maximum CPF contribution for his salary point is being used to service the mortgage. Worse, most people upgrade their homes during the course of building their family and end up locked in at their mid-career salary points, making it even harder when job difficulties hit them in late career.
The fact remains that, while businesses like Courts can do this to earn from its customers, the government of Singapore simply should not do this to its people.
This definition of affordability as presented by Khaw only benefits the government because HDB can earn the interest over prolonged durations while the CPF traps the accrued interest. It does nothing for the common man other than bind him to a financial commitment akin to modern slavery. As Singaporeans tend to follow the lead of the government when it comes to general decision-making, Khaw’s definition leads the people onto a wrong mindset that harms them more than anything else.
It is surprising that the PAP government, which is famous for calculating everything in terms of total cost, has time and again conveniently avoided all talk of the actual costs and implications of ‘buying’ a home over 30 years (when actually you are merely buying the right to live there for 99 years, and paying for this right for three decades). Even if there is good reason to dumb it down to monthly installment figures, then the responsible approach would be to consider a more muted mortgage period such as 20 years to define this affordability.
To use ‘maxed-out’ calculations and then call them affordable is ridiculous and irresponsible. It means that the buyer must remain employed at all times and cannot take up another job for a lower pay – because the maximum CPF contribution for his salary point is being used to service the mortgage. Worse, most people upgrade their homes during the course of building their family and end up locked in at their mid-career salary points, making it even harder when job difficulties hit them in late career.
The fact remains that, while businesses like Courts can do this to earn from its customers, the government of Singapore simply should not do this to its people.
