Are Homes Affordable? (27-Sep-09)

If you looked at the latest HDB ballot under 'Sale of Balance Flat, Oct-09', you can see that the demand for flats is still far-exceeding than that of the supply. The application is easily 10-folds or 20-folds to that of the flats available. Who's the one laughing all the way to the bank? Must be HDB...

3~4 years back, I was one of those who gave up on the balloting system after 3 failures.. and I din manage to strike 4D with the unlucky balloting 4-digit queue number either.

Going to the open market, are homes affordable? I snagged at the HDB's ruling of the decade-old $8,000 income ceiling, where this group of people cannot apply for new flats or enjoy housing grants in the resale market. They also find private homes too pricey now. (For those, who can well afford it, congratulations.)

As an IFA, I would advise my clients to buy a house within their purchasing means, meaning the debt-service to income ratio ideally less than 40%. The idea of financial independence is to have a fully paid home (or + even a fully paid car), and building a sufficient lump sum for your retirement needs WITHOUT the need to go to work. But the reality is that many people still end up buying BIG HOUSE, BIG HOME in pursuit of present luxury.... pay pay pay their present debts, and forgetting to build up their retirement funding.

Remember, your home is not a true asset if it's used purely for residential purposes. It's only when you generate income out of it then it becomes a valuable asset.

For those who are looking for their dream homes, do a wise calculation on how much you can afford and plan far away. Call me at 9876-0237 for a non-obligation good financial planning. I believe my role as an IFA and Real Estate Agent would assist you to make an informed decision.