Due to constant propaganda by PAP, HDB flats appear to be affordable.
But once buyers become aware that we are merely lessees and work out the actual cost of the 99-year very long-term lease, we begin to understand just how costly and risky committing to a HDB lease really is.
The unethical part about buying a HDB flat is the inclusion of land cost when strata titles are not transferred to buyers. Although PAP has refused to disclose the land cost component, it is estimated to be about 60%.
A new 5-room flat costing $400,000 therefore includes $240,000 in land cost. Using our CPF to pay for housing would mean the loss of investment return on $240,000, a substantial amount.
If land cost is not included, $240,000 plus 2.5% interest earned over 3 decades add up to $503,416, more than sufficient for one’s retirement.
Including land cost in HDB flats is unethical when all property ownership rights remain with HDB.
CPF members lose big time as retirement savings are channeled to the state or financial institutions instead of long-term investments.