The Singapore government is refusing to lower housing prices despite the increase in balance flats (SBF). In May 2013, SBF flats were at 3,100. 3 years later today, the figure increased to 5,170, indicating a clear oversupply of HDB flats. Only 3,770 BTO flats were issued making up a total supply of 8,940.
Prices of 4-room flats remained unaffordable and cost as much as S$463,000 in Queenstown. Although government grants are as generous as up to S$70,000, the amount has to be repaid when the homeowner sell the house in the future. A brief calculation on a typical 25-year-long S$300,000 mortgage loan will have Singapore homeowners coughing out S$1,362 in monthly payment. Although mortgage payment can be repaid using the CPF Ordinary Account, Singaporeans would have wasted 25 years of their working life paying off mortgages instead of saving up for retirement. Retirement has become a chronic problem in Singapore because of low retirement interest rates and increasingly restrictive government laws on CPF withdrawal. Just earlier this year, the re-employment age was increased from 65 to 69 years old, which also suggests that the CPF Withdrawal Age will also increase to 69 as has been so in the past.
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Many Singaporean elderly have been told by the government to sell their house in full or in part (lease buyback scheme) for retirement. This resulted in poor families being trapped in poverty cycles as surviving children get little or nothing left in inheritance. High property prices have also caused Singapore’s fertility rate to plummet, which is currently the world’s lowest at 1.24.
In Sep 2015, Minister Khaw Boon Wan claimed that the HDB made S$2 billion losses because new HDB flats sold are too cheap and subsidies were too generous. However, the Minister omitted the undisclosed billions of profits from land sales under another stat board, Urban Redevelopment Authority (URA). The current Minister of National Development Lawrence Wong do not believe HDB flats are unaffordable and claimed that first-time homebuyers have been taken care of, and that the current sales is focused on second-time homeowners.