12,000 HDB flats per year to meet demand

In Singapore, a large percentage of Singaporeans live in Housing Development Board flats or HDB flats. Since the government controls the supply of the flats, there has been a steady increase in the value of the flats over time.

Over the past few months, there has been complaints (mainly amongst younger couples) that there are not enough HDB flats to go around with long queues and waiting times to buy their dream homes.

Just today, I read the newspapers and see that the Housing Board has decided to offer between 10,000 to 12,000 flats ever year over the next 5 years to meet this growing demand. This will serve as the guide for HDB's build-to-order scheme with the actual number made available depending on market conditions.

This year's planned supply of 6,500 flats was quickly raised to 13,500 flats after there was a spike in demand.

So what does all these changes by HDB show?

1. Demand of flats is totally unpredictable and depends on market conditions. Since demand is unpredictable, supply of the flats need to be changed and tweaked accordingly.

2. Complaints by Singaporeans are heard by the government. That is certainly good news for all of us.

Some concerns I have still remain however.

It is my personal opinion that if the supply of flats can be readily tweaked accordingly, this will have an impact on the value of ALL HDB flats across Singapore.

When most Singaporeans spend a large amount of their money and savings into buying their homes, it is not in the benefit of the majority of Singaporeans if the value of their houses do not rise in accordance with market conditions.

I also attach an email from one of my friends regarding this HDB issue. It was written by a professor from NTU and contains a lot of insightful thoughts on the matter. As I do not have the name of this professor, I am not able to give him the necessary credit due in this email.

Please see the email (with certain details deleted).
____________________________________

Thanks xxxxxxx,

Yes, we are living in an upside down world, and Singapore is no exception.

In my joint paper with ******* (attached), to appear in the book "*****" to be launched next month by *** ***, we made the point that in 1965, the goverment owned 20% of the land in Singapore. Today, it owns 80%. There is really no proper market-based land market. The price of land on which HDB/URA builds is artificial. I think about 2/3 of the cost of a new HDB flat is land cost. However, this land was obtained at confiscatory prices from private landowners under the Land Acquisition Act. Hence the present land cost of HDB flats is inflated, because it is based on private land values which are themselves inflated.

Hence, somebody who bought a landed property in 1965 (like myself) has seen its value increase 500 times in 40 years. I sold it and donated 1/3 to charity (****** etc.) as it is not due to my hard work or economic foresight.

I wrote an article in the *** *** suggesting a way out, otherwise young Singaporeans will be priced out of buying HDB flats. Since all land on which HDB flats is government owned, such land should be based on their acquisition cost which is very low, and not on the "market" valuation, which is essentially that based on inflated private property values. Hence new HDB flats will once again be affordable to young graduates. When I graduated in 1960, I could get a HDB flat at 3-4 times my annual income. Today it is 10 times. No wonder our recent graduates feel frustrated.

The problem with this radical proposal is that the values of resale flats would drop. Their prices are also artifically high due to the decision made in the early 80s (referred to in Ngiam Tong Dow's book "The Making on a Mandarin") to raise the value of the land on which HDB flats are built. This was because existing flats owners were making excessive profits when they sold their flats, since they had bought their flats based on HDB land valued at confiscatory prices, and now they can sell at private market-based land values. Hence the prices of new HDB flats rose from the early 80s onward. This made the rise in CPF rates of contribution to 25 +25% necessary which caused the 1985 recession, the first in Singapore's economic history. The HDB in other words did not want new flat owners to make that kind of a handsome profit.

Today the flat owners who are making really handsome profits are those who had bought theirs before the early 80s. There is a politicial cost in alientating these flat owners if the price of new HDB flats drops to what is their "real" cost (i.e. based on the confiscatory acquisition value of the land), so that the price of old resale flats also have to drop. Senior citizens would vote against the governement.

However I think this group is like me, who never really dreamed to get such a high capital gain, when they sell their property. However they are now in the 50+ age group and are facing an uncertain future due to the lack of a safety net for those growing old. If we favour the young by making new HDB flats cheap, the medium-old and old-old would suffer by seeing their only asset, an HDB flat, depreciate in resale value.

Another problem is that some of these old flats are still being HDB-loan financed. If their resale value drops, the HDB may get into trouble. It was only in 2000 that the HDB allowed commercial bank financing.

However this also means that commercial banks now would get hit should those who purchased HDB resale or new flats on commercial loans, find that their market value is below their loan value (negative equity).

Any suggestions on how to get out of this dilmma, now that 85% of Singaporeans stay in HDB flats?

*** ***
____________________________________

Sell Your Hair For Money

In Madrid, cash-strapped Spaniards are selling their hair to to pay their bills. The hair is sold to companies who export natural hair for wigs or extensions.

While these companies are able to get huge supply of hair from Asia like China and India, they prefer European hair which is considered of a higher quality and is not as thick as Asian hair.

Ponytails of hair can sell from between 50 to 150 Euros with the price being dependent on both the weight and length of hair.

Justino Delgado is one such happy man who has 90 tonnes of hair kept in his warehouse ready for export to Europe and the United States. The hair is washed and colored in the factories and braided together before export. His business currently employs around 30 people.

How To Retire in Singapore

When you hear people making the statement "How to retire in Singapore", it is usually not a question but a lament or opinion that it is close to impossible to retire comfortably in Singapore.

Is it really so difficult to retire in Singapore? What must one do to ensure that they can retire comfortably when their working days are over? How much does one need to safely call it a day from having to work?

Think about it..some famous celebrities have actually moved to Singapore. This include Gong Li and Jet Li who have both become Singaporeans now. Of course, I am sure their purpose is not to retire here but it seems that they find Singapore a really nice place to live in.

I believe that most Singaporeans also do like to live in Singapore and retire here. However, they are finding it increasingly difficult to cope with the high cost of living and that's when they start to wonder whether they will be able to save up enough for their retirement fund.

Based on the MOH website, it seems that the male and female life expectancy has been increasing slowly over the years and I will not be surprised that for my generation (those in their 20s and 30s) the average life expectancy should be around 85. Considering the retirement age of around 60, that is a good 20 years of time (and money) to be spent during one's golden years.

In a lot of forums, I have found similar concerns amongst many. One comment even states that:

"The rich come to retire in Singapore. The poor go to Malaysia to retire. The neither here nor there aim for Australia" - Milo178 in Channel News Asia forum

I have also been thinking that retiring in Malaysia is a very viable option as the exchange rate will literally double my spending money. In that sense, I will be able to retire much earlier compared to someone who wants to retire in Singapore. I could even rent out my place in Singapore for passive income and convert that money to Ringgit =) That is indeed a very tempting thought.

Some people think that retiring is an impossible dream in today's world. This cannot be the case as I have read of people from other countries who have been able to retire in their 30s!

So i believe that it must be possible for people to retire in Singapore. People whether they are in their 30s, 40s or 50s should be able to hit their retirement goals. It is just how long they take to reach it.

I would like to think that there are a few steps that all can take to better prepare themselves for retiring.

1. Determine how much you need for retirement

2. Start saving towards that goal and make sure that the amount you save will enable you to hit that goal

3. Invest your money for the long term to get better returns

4. Cut down on your expenditure

5. Look for sources of passive income

Besides doing financial planning for yourself, you need to make sure that your children (if any) becomes financially independent from you and do not rely on you for money. You will be surprised that some young adults of ages twenty and above still depend on parents for money.

The CPF website has an excellent calculator to help you do your planning

Conversations With The Poor

The poor people in Singapore really have sad stories to tell. While I am striving for financial freedom here in Singapore, there are actually poor people all around me who cannot even dare to dream of such an end goal.

Their lives are tangled in an unending cycle of debts, medical bills and other payments that they must make to simply survive. They have simply no savings at all.

Sometimes, one can really wonder whether it is due to their own efforts or pure misfortune that they end up doing what they are doing.

We can see the poor all around us in Singapore if we open our eyes. They are there begging on the streets, collecting soft drink cans, selling tissue paper, lottery tickets and stuff. Some of them have a sad story...some of them just have themselves to blame.

However, I don't think that one should judge them and not give them any money just because they are poor.

You never know all the sad stories behind their lives and how some of them were just like you but due to some family problems (usually illnesses and hospital bills) that they end up where they are.

As our society gets significantly older, many people might not have done the necessary financial planning to make sure that they are insured and saving sufficiently for future unxepected events. I guess that is the government's concern and it's also why they are encouraging people to save more and setting the retirement age much higher.

This video shows a sight of Singapore that is not commonly seen. I have personally seen some of these sights before and it saddens me.

How To Eat Chicken Wings

I have been eating chicken wings for a cool twenty over years now and just realised that I have been eating it the wrong way!

Here is one way to save money...by eating your chicken wings cleanly so that you are not wasting any of the meat. See the video below:

How Would You Spend $100?

A few days back, I wrote a posting on 1001 Frugal Things To Do

It seems like a lot of people have many crazy and wicked ideas on how to save money. I particularly liked La Papilion's suggestion on going to Macs to store up on chilli and ketchup.

Anyway, I thought today was a good day to write about spending instead of saving.

Many people are adverse to the word SAVING.

The reason for that could be that they do not know what they are saving for or they just do not like their spending power to be limited.

That is why you do not get people who follow their monthly budgets. We all have budgets but we most probably can't stick to one (okay, perhaps those who go to Macs for chilli and ketchup top-ups are able to do so)

So let's turn the game around. Instead of asking you to stick to a budget...let's say that I am giving you $100 today and demand that you spend EVERY single cent, what would you spend it on?

This is basically what a budget is about. If your monthly budget for spending money is $3000, and saving the remainder(that is after excluding all your fixed expenses like mortgage loans and car loans), go and work out a daily budget for yourself and figure out how you are going to spend every single cent of that budget that you have given yourself.

Here is how I might spend that $100

1. $20 on a bottle of wine

2. $15 on a book to read

3. $40 for a nice dinner for two

4. $25 for some home accessories to make my home more homely and beautiful

Doesn't this way of thinking make budgeting much more fun? How would you spend yours?

Save On Home Repairs

I just fixed some leaking shower head recently and realised that it was really a simple task! Saving on home repairs is much simpler than I thought it would be.

Recently, the shower in my bathroom started to leak and water seemed to be squirting out of the hose that linked to the shower head. There was an obvious crack and it need replacing.

You see...the problem is ...in all my years of schooling or staying at home with mum and dad's, I have never had to fixed a broken shower head.

If I were ten years younger, I would have just called the plumber or repairman in.

But the wife looked at me squarely in the eye and said: "My father says that it is really easy to fix it. Just go buy another of those things and it can be done."

So I went out and bought those bendy flexible pipes (I am not sure what you call those things) for less than $10 from one of those provision stores and returned home.

I was not even sure how to get started and there were no instruction manuals or stuff that came with the piping system!

To cut the long story short, I just simply unscrewed the shower head from the pipe that it was connected to and replaced it with the new one. It took me less than 5 minutes to get the job done! It was that simple.

I felt like a man...a real man ..you know what I mean? Like some young boy who had just crossed into manhood.

Anyway, I figured that I must have save a good thirty to forty dollars repairing the stuff myself instead of calling a plumber. Looking back at how easy the task was, I think the plumber would most probably be laughing his head off after fixing it for me as it was REALLY such a simple task! Just screw it off and screw it on...

Anyway, I realised that everyone could do with some tips on saving on home repairs:

1. Get Free DIY advice. Search the internet or youtube.com to look for how-to videos to carry out simple procedures like fixing a tap or replacing the light bulbs.

2. Learn Their Lingo. To cut the best deal from those contractors and repairmen, you need to be able to speak their lingo. If you are not able to speak their lingo, they will know that you know next to nothing. Before calling on them, be sure to check out forums and sites to be better informed so as to be able to speak their language. (For example, I was getting a quote for window grilles recently and searched a few forums to find out what was the average price that people were charging for window grilles. In addition, I learnt that they charged window grilles per square foot so when calling the contractors for a quote, I simply asked them how much were they charging per square foot of aluminium bronze colored window grilles. When I did not asked them how much they were charging, they simply offered to come down to my place to do some m easurements.)

3. Get 3 quotes or more. Try to get 3 quotations or more whenever you plan to repair something. You will be amazed at how much money you can save.

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