At his PAP rally speech this evening, former Minister Khaw Boon Wan claimed that if Singaporeans can pay HDB installments, it means housing prices are affordable:
“How do we measure affordability? What do we mean when we said it is affordable? If you only earn only S$1,000 a month, you can afford a 2-room flat. If you earn S$2,000 a month, you can also afford a 3-room flat. If you earn S$4,000 a month, you can afford a 4-room flat. Monthly installments can be paid from your monthly CPF contributions, in other words, you do not have to take out of your pocket much cash to service your mortgage that is how we measure affordability.”
Photo of Khaw Boon Wan from Facebook video
However, the former Minister of National Development did not factor in the impact on retirement because too much CPF money has been put in HDB flats. In other countries, affordability is measured as a factor of a person’s yearly income. Khaw Boon Wan however avoided using this measurement and chose to use CPF contribution as a measure of affordability on the assumption any Singaporean can be gainfully employed for the next 25 years for his mortgage.
Many Singaporean elderly are facing inadequate retirement funds in their CPF because from paying too much for their HDB flats, as accumulation of CPF funds for retirement has been severely delayed by housing prices.