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High inflation on property price makes Singaporeans not work hard?

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Degree or not, in the past 10 years, I've seen a lot of friends do pretty well.

Before 2000, I've several friends getting married, and when they get married, they buy a HDB flat. Sounds simple, and back then it is pretty affordable.

With or without degrees, they could easily afford a brand new HDB flat, 4 room HDB flats in Hougang and Woodlands is UNDER S$200k.

Many of my friends then started to dream big. Earning a salary of $2000 a month, many of them decided to buy a Condo with $0 downpayment, and rent it out when it is fully built, while living in another HDB.

FYI: In 1990, 5-room new flats cost around $70,000.

Here is the Math.

HDB - 4 room - $150,000

Sell after 5 years - $250,000

Profit $100,000

Buy Condo $500,000

Sell after 5 years - $750,000

Profit $250,000

 

In the meantime, the spouse will buy another small HDB flat to stay in and with profit, upgrade that as well.

As you can see, making $100,000 in 5 years and subsequently, making $250,000 is not really hard. So taking an average of $35k a year profit ($350k in 10 years), for a person who has a job of $3k a month, it is even impossible to make that amount.

As a result, many Singaporeans just want a high paycheck so that they can have maximum loan to get the biggest apartment ever and pray for appreciation.

This method has yield great success over the past decade, from the 80s, all the way to 2010, where the government suddenly woke up and realized that for a large part of the population who did not partake in this "get rich through property" scheme, they are falling way behind.

Today, my friend makes $3000 a month, but he owns 2 condos and a 5 room HDB flat in Ponggol. Yes, it is definitely possible to "succeed" in Singapore without a degree, however, when you look at your earnings compared to what you make on your property appreciation, many people feel that their property makes much more than them. (In fact, when you earn more, the bigger houses appreciates even more)

Thinking back, this also reflects on the bad working attitude on many of these investing Singaporeans. Subconsciously, they are just working for a paycheck to pay off their mortgage, and do as little as possible to get by. No one wants to go the extra mile as their income is negligible compared to their investments, but they need it to secure a loan. So many Singaporeans take as little risk as possible to stay on, and as little effort as possible because they are not paid well.

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You can't blame them. This system was put in place by scholars in the garmen, and benefited all, who do not really think about the future generation of Singapore -- how the hell are they going to afford HDB flats?

The easy success path by buying a house seems to be over, unless the garmen continues to bring in more foreign talents, and if that is the case, I would say, hire the foreigners, because the Singaporeans who are earning $$$$ just to pay mortgages are not going to be at their 100% performance, because they rarely get paid more than the returns of their property over time.

This is the sad reality of Singapore.

 

Ironbowl

*The author blogs at www.robinlow.blogspot.com


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