Serious New Test Balloon? Stop Sinkies From Using CPF To Buy Subsidized HDB Flats?

[JohnTan]

In response to President Halimah's call for policy suggestions, economist Walter Theseira suggested disallowing the use of CPF savings for home purchases. The measure was proposed in order to address inadequate retirement saving. This could be a logical concern, as putting a significant amount of one's retirement into home may leave them with too few remaining assets to retire comfortably, especially given the uncertainties around the 99-year HDB lease.

This proposal would likely have a massive impact on the housing market—over the past decade, around S$82 billion was withdrawn from CPF accounts in order to purchase HDB flats. Given the scale of this proposal, it is worth asking: how would homeowners and prospective homebuyers be affected?

How Does The Current System Work?
Currently, the Public Housing Scheme (PHS) allows individuals to use their CPF Ordinary Account to pay for a part of their HDB flat purchase. However, homebuyers are limited in the amount that they can withdraw from their CPF savings for the purchase of a HDB lease. Limits are based on the number of years remaining in the lease at the time it is purchased.

How Would This Proposal Affect the Real Estate Market?
In the short-term, we expect that housing prices would drop as result of proposed rule. The rule will likely prevent many prospective homeowners from being able to afford to purchase homes, as they would have significantly less money to contribute to the purchase. The decreased ability to buy a property should lead to a decline in market demand, which should in turn cause a decrease home prices.

For example, we can approximate the scale of change with some basic calculations. In 2017, $7.4 billion was withdrawn for the purpose of purchasing new and resale HDB flats. There were 22,077 resale applications and approximately 17,500 new units in 2017. Assuming average resale values of S$450,000 and average BTO prices of S$310,000, the S$7.4 billion withdrawn in 2017 represents about half (48%) of the total HDB market transactions (S$15.4 billion). Although these are rough estimates, roughly 20% of this might be supporting the actual home value, while the other 30% is being used to pay interest on home loans. In the long run, it seems reasonable to expect that HDB prices could drop by 10-20% as developers acquiesce to consumers' reduced purchasing power while prospective buyers take longer to build enough savings to buy a flat.

Good News for Prospective Home Buyers?
Overall, this proposal appears that it would be a net-neutral event for prospective home buyers. On one hand, these individuals may have to save longer in order to purchase a home since they will not be able to access their CPF savings. On the other hand, a drop in housing prices could offset their reduced ability to purchase homes. Additionally, these individuals will benefit from having additional retirement savings since their CPF will be able to compound untouched over a long period of time.

Bad News for Existing Homeowners
However, this proposal definitely could have a negative impact for current property owners. If all buyers in the market are less able to afford current real estate prices, the market forces tend to adjust the prices lower until people can afford flats without the help of their CPF accounts. This would ultimately mean a reduction of wealth for those who already own HDB flats.

Additionally, current homeowners may face another negative consequence. Currently, individuals re-selling their HDB flats must refund their CPF account based the principal amount withdrawn for their HDB flat purchase, as well as the amount of accrued interest that the savings would have earned if they had not withdrawn from the CPF account initially. If property values drop significantly, these homeowners will have much more difficult time meeting this refund requirement.

How to Make a Smooth Transition
The proposal would certainly incentivize increased personal savings and promote wealthier retirement, which could be a financially responsible goal. In order to make this transition easier, however, there are a few concepts to consider.

First, because existing homeowners must refund their CPF account based on the amount withdrawn for purchasing a home, declining home prices could put them at significant financial risk. One way to make the proposed rule more palatable would be to decrease the refund requirements for current homeowners.

Additionally, if HDB leases were extended, policy makers might be able to both buoy short-term home prices as well as mend a long-term structural issue related to HDBs. It could also help the owners of older flats, whose retirement savings could benefit from increased resale value if leases were easily extended beyond 99 years.

The article What Would Happen if You Couldn't Use Your CPF Savings to Buy a Home? originally appeared on ValuePenguin.

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https://sg.finance.yahoo.com/news/happen-couldn-apos-t-cpf-213202807.html

 

[sweetiepie]

KNN Walter can fight with my uncle for post of minister for sinkie losers way to go ...KNN

 

[AhMeng]

Sinkies cannot use CPF to buy, but Temasek can use Sinkie CPF to gamble ..Lol

 

[frenchbriefs]

7.4b a year siphoned away to fund this hdb Ponzi with diminishing leases and zero end game value.imagine how much cpf billions have been lost in the last 20,30 years.

 

[mako65]

Tats not helping either bcoz the money in our cpf is still locked! Rather use it to buy hdb flat than being used up by Temasick..conspiracy theory by tat walter theseira! Fucker must be paid to deduced da statement. .

 

[rocket]

Following the ridiculous speech by President Halimah Yacob, state media Straits Times featured a government university’s professor absurd call to ban Singaporeans from using their CPF savings to buy HDB flats. In a premium article titled “President Halimah’s call for bold changes draws bold ideas” on Straits Times, a government university scholar, Professor Walter Theseira told Straits Times that Singaporeans can retire if they do not use their CPF money to buy exorbitant HDB flats:

 

[glockman]

7.4b a year siphoned away to fund this hdb Ponzi with diminishing leases and zero end game value.imagine how much cpf billions have been lost in the last 20,30 years.

Five decades of siphoning sinkies' CPF in the name of purchasing an HDB flat which they told us was an "asset". Sinkies are fucked with little CPF left, in reality paying off a lease not an asset. The mother of all Ponzi schemes.

 

[halsey02]

Five decades of siphoning sinkies' CPF in the name of purchasing an HDB flat which they told us was an "asset". Sinkies are fucked with little CPF left, in reality paying off a lease not an asset. The mother of all Ponzi schemes.

They say....HBD is your ASSEStS, paid by your CPF, & the value ENHANCED from S$10,000 to S$500,000, so that you can have MORE GOOD YEARS & live a SWISS STANDARD OF LIVING. Now, they say, you do not have enough money for your retirement!?? don't use your CPF to buy flats? wtf?.

In reality, for many ,many oldies are force to work, not enjoying their twilight years..so, what happened to that assets enhancement?. or the good years? or was it more good tears ( they never read the lips). Now, that Jack Ass Neoh will make another of his "educational" movie..."CPF NOT ENOUGH"

When the CPF scheme started, even you have bought a HDB flat, when you retire, many have enough to retire & enjoy life till their twilight years; there were those who spend their money, on wine, women & song...that we don't count. Many up to the 1980's, do not have to clear tables, collect card boxes, be people pushers in the morning..etc. They could spend time, relaxing, taking grand children out, have a hobby or even...just lazing around. No need with the skillsnofuture thing.

What happened, we all know, over the years....they have voted for a government that had diluted the value of their money in CPF & come out with, unstoppable rules to tie down their CPF retirements funds. As a result...many, cannot retire...many do not have enough to live through their retirement years.

But...will they, be like the Malaysians...wake up, & make a change?

 

[sweetiepie]

KNN so now walter wants sinkie losers cpf oa sa ma to be untouchable and work till 65 years old or more so that they have sufficient money to retire. My uncle say KNN then he has to cap an amount for sinkie losers to borrow money to buy hdb or else this will not deter them from buying KNN in this case puki mak don't know will say you siao ah then you want these losers to stay where KNN

 

[nayr69sg]

The plan goes like this.

Last time allow use CPF to buy HDB flat.

Now say at end of 99 year lease value $0.
Basically eat all CPF. Write off the debt to the sinkie. Say I owe you nothing. Your money gone.

Then now build new HDB flat say must use non CPF money. Why leh? Cos need the money for fresh injection of REAL money into the HDB coffers.


Damn smart. Only you sinkies dont get it.

 

[whoami]

I know this would happen. Matter of time. But 70% sinkies would still say is ok. MIW take care of our cpf plus interest. Upon reaching 65 we get payouts. Lots of money cos we didnt utilise it since our 1st contribution of cpf.

 

[bobby]

With CPF to be used for property purchases, real estate maket will crash in Singapore.

 

[face the facts]

knn very suspicious...... is CPF really broke??? i wonder

 

[glockman]

What happened, we all know, over the years....they have voted for a government that had diluted the value of their money in CPF & come out with, unstoppable rules to tie down their CPF retirements funds. As a result...many, cannot retire...many do not have enough to live through their retirement years.

But...will they, be like the Malaysians...wake up, & make a change?

I firmly believe this topic will be a flashpoint in the next GE. Sinkies are confirmed daft and balls less but they also love their hard earned money. No sane person would take kindly to being robbed and cheated, and be made to suffer in poverty during old age.

 

[zhihau]

I firmly believe this topic will be a flashpoint in the next GE

Sinkies will be sinkies. I've been a minority outside of HG SMC and AJ GRC. I tend to keep myself within the opposition wards most of my waking hours to feel being part of the majority. I know it's not healthy but that's the reality of it

 

[glockman]

Sinkies will be sinkies. I've been a minority outside of HG SMC and AJ GRC. I tend to keep myself within the opposition wards most of my waking hours to feel being part of the majority. I know it's not healthy but that's the reality of it

Good on you, we need to do whatever we can in the name of self preservation. I tend to be good friend with like-minded people, and I am closer to like-minded relatives.

 

[JohnTan]

Sinkies will be sinkies. I've been a minority outside of HG SMC and AJ GRC. I tend to keep myself within the opposition wards most of my waking hours to feel being part of the majority. I know it's not healthy but that's the reality of it

Once we remove a small handful of the residents, oppies will cease to be the majority in Aljunied. We've already moved in lots of new residents into Potong Pasir, Hougang and Aljunied wards from safe wards like Jurong and West Coast. Oppies are a shrinking minority everywhere.

 

[glockman]

Once we remove a small handful of the residents, oppies will cease to be the majority in Aljunied. We've already moved in lots of new residents into Potong Pasir, Hougang and Aljunied wards from safe wards like Jurong and West Coast. Oppies are a shrinking minority everywhere.

Looks like your pap has been busy

 

[shittypore]

His cancer will remove him from PAP, b4 next erection.

 

[halsey02]

I firmly believe this topic will be a flashpoint in the next GE. Sinkies are confirmed daft and balls less but they also love their hard earned money. No sane person would take kindly to being robbed and cheated, and be made to suffer in poverty during old age.

The 70% will & that is why, we will never see what we had seen the voters did in our generation, happening here in Singapore.