When the HDB was first established, it provided the noble objective of helping Singaporeans own their own home and was pivotal in nation building. Recently however, policies have been working against a group of lower-middle income Singaporeans to the benefit of foreigners who came in during the 2006-2010 period and were able to leave Singapore when their own home countries were booming and retiring as early as 40 as multi-millionaire equivalents in their own home country.
Consider the Pusumbal couple.
Back in 2004, the then 27-year old husband left his job as a bank’s assistant branch manager in the Philippines to become an audit senior in Singapore, with education papers from a university not known for its rigorous standards. His wife from the same university became a HR manager at a hotel where they had a combined income of $6,200, more than 5 times of what they earned back at home. Their 4 year-old twins remained with their grandparents in Manilawhile they managed to get their PR papers.
After being in Singapore for 6 months, they bought a 4-room HDB flat near Boon Keng MRT for $215,000 with a 10% downpayment. Since the Pinoy community was just starting to grow at that time, they rented both spare rooms out to their compatriots for $1200 and used this rental income together with their CPF to pay off the housing loan with a 10 year loan term. Even so, they had extra savings which they invested in stocks on the SGX.
In 2012, they decided to leave Singapore for good and retire back in the Philippines. When consolidating their assets after 8 years in Singapore, they realized that their flat was now worth $680,000 (with an outstanding loan of $45,000) with their stocks increasing by more than 4 times. Effectively, they had earned more than $850,000 these years mainly because of asset enhancement caused by many hundreds of thousands of immigrants like themselves.
Contrast this with the case of XW.
Born in Singapore to Singaporean parents, XW completed his “O” levels in 1994 with average results and ended up doing an engineering diploma at a local polytechnic. After his graduation in 1997, he spent 2.5 years of his life serving the nation in the infantry. After his ORD in 2000, he worked as a construction supervisor and took back about $2000 a month.
Due to his long working hours and job nature, girls he dated left quickly and he thus remained single. As he approached his 30s in 2007, he realized that it was increasingly destined that he remained single and looked forward to settling down alone. At that time, he was looking to buy a 3-room resale HDB flat near his parents for about $190,000 which he intended to partially finance by renting the spare room out.
As he continued searching for his dream home in the next few years, he could not believe that the prices were increasing at such a rapid pace. Upon turning 35 last year, XW realized that his hopes of owning his own place was dashed and continued to stay with his parents. Even when news broke out in 2013 that he would soon be eligible to buy a new 2-room BTO, he was hardly pleased given that this “would mean waiting for at least another 4 years” and it was “ridiculous that the government took so long to remedy this problem despite our cries.”.
Supposing one decided to retire in Manila, what kind of a retirement lifestyle would S$850,000 buy?
I posed as a prospective buyer (claiming to have a Pilipino wife due to restrictions on foreigners’ ownership of land) and contacted a reputable estate agent. This enquiry only led me to find that the potential lifestyle one could but with that amount is beyond the reach of even many Singaporean millionaires.
A huge 5000 square feet contemporary square foot semi-detached house with 5 huge bedrooms in the suburbs costs merely $180,000 (fully furnished) while a second-hand luxury car like a Camry would cost about $15,000. The remaining $655,000 invested at 6% per year would give a cash flow of $3300 a month, enough to live like a king where full-time domestic help costs $60 a month.
At the end of the day, who really pays for the Pusumbal’s lifestyle?
The main bulk of this wealth comes from asset enhancement through their HDB flats, which does not affect the foreigners since their stay in Singapore is only temporary. The real people who pay the price are Singaporeans who stay for good, having to bear the costs of permanent inflation due to the presence of foreigners and pro-foreigner policies. Some like XW can only look on in agony.
Come 2016, many Singaporeans will no doubt be rallying against the PAP!
Joseph Tan
*Article first appeared on https://www.facebook.com/notes/joseph-tan/the-story-of-the-paps-betrayal-part-1/141114589415267