Interest cost and stagnant property prices will wipe out CPF used for HDB housing consumption

The PAP government has often reminded CPF members on the need to be adequately prepared for retirement.  But on the other hand, CPF members are encouraged to consume our CPF for housing.

Common sense tells us that the only roof over one’s head isn’t an investment; only a second or multiple properties owned by the rich are investments.

In financing our homes using retirement savings, CPF members should bear in mind the interest cost.  Let me illustrate with the example of a 25-year HDB loan @ 2.6% in the table below.

Principle and interest on a 25-year HDB loan (Calculator: SRX Property)
The CPF member consumes $481 every month/$5772 annually/$144,300 over 25 years on housing.

If HDB flat is an investment, it should appreciate by at least 5% over the long term.  But this will not happen for a number of reasons.

Using the above example, a $500,000 5-room HDB flat, do you know that a low 4% rate of return means the property value will have to increase to $1.33 million in 25 years?hdbloan4
Even at a meaningless long-term return of 3%, the price will need to increase to above $1 million.
hdbloan2Should property prices skyrocket to such levels, foreign investors will skip Singapore as it will be priced out.

It is illogical to extrapolate from last century’s property prices as we are in a totally different cycle.

Anyway, MND’s Lawrence Wong has also confirmed that HDB lessees will have to return their flats to the government when their leases eventually run out: HDB flats will be worth $kosong. Property Guru

Lau Goh’s and LKY’s asset enhancement hogwash has now been exposed by Lawrence.  CPF members who purchase old HDB flats will see their CPF totally wiped out when the HDB lease runs out.

As mentioned, the current situation  is vastly different because flats are ageing fast. More than half a million HDB flats, give or take, will be 40 years or older by 2025, 50 years or older by 2035.


Which $500,000 HDB flat today will be able to generate peanuts investment return of 3% when more than 600,000 50-years old HDB flats will be lelonged in 25 years’ time?

A big chunk of CPF used for housing will be wiped out at retirement due to interest paid to banks/HDB.
If a HDB flat today cannot even generate peanuts 3% long-term return, can this be considered an investment?  Only a fool should believe in PAP’s hogwash.
The only roof over one’s head is our home, not an investment.

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