I grew up in Singapore hearing about how Australia was a great place for retirement. I suppose back in those days, a Singaporean who received his golden handshake could easily buy a big house on a large plot of land for $100,000 in Australia and live happily ever after. So the story went.
The sentiments never changed till today. As far as I'm concerned, I'm still receiving emails from hopeful Singaporeans telling me how they love life in Australia as they seen it during their holidays. Still, I'm hearing folks asking me why I moved to the "slow land" they would only consider to go in their candles are burning short. Is it really that simple? I thought probably not, financially at least.
The last time (today) I meddled around real estate websites, I found that standard "4x2" houses were in the $500,000 price zone at modest suburbs in Perth. The better suburbs will cost even more. I put on my Singaporean cap and tried my best to recall the standard mentality of my people. A checklist would look like this;
1. Buy a house - Must
2. No apartments. Because enough of HDB living. Land - Must
3. Land doesn't depreciate. Houses do. So land is a must. No land no go.
For a pissed poor migrant with very little education and skills and no perky arse, it has always been my style to chuck the book of standards into the bin. I think every migrant who can count with fingers can do the sums here to find out where he stands in the current situation for living the the past is a foolish mistake a man can commit. So how does the sums look like these days? Off the back of my head,
If Ah Hock saves up a $50,000 deposit and buys a $550,000 home in a stylo-milo suburb that allows him to enroll his son in a stylo-milo school, he takes a $500,000 home loan over 25 years and pay a 7% interest rate. (It's probably possible to get a rate of 5%+ these days but it's always the best to do worse case scenarios in such calculations)
Over the next 25 years, Ah Hock will end up paying more money in interests to the bank than he'll pay to actually buy the home. The interests paid at the end will total to a jaw dropping $560,000, fully non-tax deductible. The total repayments will be $1.06 fucking million bucks. Not inclusive of home repair and maintenance costs, which could come up to a big sum over 25 years.
So if Ah Hock sells his house 25 years later at $1.06 million, how much money did he really make? Let's see.... Ah Hock would tell me, "I bought my house 550k, I sold at 1.1mil, I made 550k leh, sibei song! Singaporean mathematics. Top 10 in the world. No wonder creative accounting is big back home. Let's just leave this at that to make Ah Hock feel better since regardless of who paid what, Ah Hock would have $1.06 million of asset on paper. I have been wondering really hard if anyone would pay that amount of take a 25 year old house off the books. Will Ah Hock lose money if valuation amount to only $1million? Optimistic ones will even tell me it could go at $1.5mil by then. Maybe. Maybe not. I have no crystal ball to peer into.
Whatever will be, the figures are telling enough to inform me that the old notion of Australia being a place for retirement will be completely irrelevant in a matter of 1-2 decades, if not already. Having the privilege of coming from Singapore, I could see where this is leading to. The question is, would the others and how would they position themselves in their own strategies?
A Singaporean Son
*The writer blogs at http://asingaporeanson.blogspot.com/