Tharman said $1,000 can buy a flat

Singapore's Deputy Prime Minister and Finance Minister, Tharman Shanmugaratnam, comment made in parliament on Thursday that household of income as low as $1,000 is now able to buy a flat has sparked an outrage among Singaporeans online.

Tharman's comment in response to NCMP Gerald Giam about Singaporeans being unable to afford a flat:

I would like to assure Mr Gerald Giam, who might not have caught up with all the developments, that our enhanced housing grants for lower income families are such that a family with a monthly income of as low as $1,000 can now purchase a small flat. 98% of our younger cohorts, those who are below 35, earn at least $1,000 of income a month. A family that earns a bit more, say $1500, can purchase a medium-sized flat.

DPM Tharman's budget speech can be found here.

So how is this possible?

Today, National Development Minister Khaw Boon Wan came out to clarify the comment made by DPM Tharman. Similarly, Minister of State in the Ministry of National Development, Tan Chuan-Jin, also made similar comments on a Facebook post.

I quote Tan Chuan-Jin's reply:

Tears were shed by some, who lamented about the ability to buy flats for their parents in the future. Others raised their eyebrows when DPM Tharman made the point about the $1,000 income family being able to afford to buy a small flat. Online critics went to town to mock the im-possibility of this.

Well...

For a first time applicant, he can apply for a new 2-room standard BTO (Build-to-Order) flat in a non-mature estate. These flats are set aside for those earning $2,000 and below a month.

These households earning $1,000 can qualify for generous housing grants. Available to them are the Additional CPF Housing Grant (AHG) of up to $40,000, and the Special CPF Housing Grant (SHG) of up to $20,000. These grants could be used for the flat down payment. Total = $60,000

How much is a flat? Using the selling price of a new 2-room BTO flat in Fernvale Lea in Sengkang as an example, it is $100,000 (offered in the Jan 12 BTO exercise; the price range was from $83,000 to $112,000)

Deduct the $60,000. The applicant needs to pay $40,000.

With a loan for $40,000, repayment per month is as shown below:

- 30 years loan : $161/mth
- 25 years loan : $182/mth
- 20 years loan : $214/mth

For a young household headed by an income earner with a salary of $1,000 per month. He will have a total of $217 contributed monthly to his CPF Ordinary Account.

Monthly cash outlay = $0

This support for families enable them to move from rental to owning their own homes. Rentals for income of about $1,000 is $90-123 for 1-room, $123-$165 for 2-room.

An Inclusive Society...making it happen

More info can be found at HDB InfoWEB

Special Housing Grant HTML the link

Additional Housing Grant HTML the link

Help for low income families HTML the link

It may seems possible from the above calculation, however, we should not forget other expenses like buying new furniture, minor simple renovation, and so on.