Skip to Content

The Government Cannot Solve All Your Singaporean Housing Struggles. There will Always Be Tradeoffs that Require Wisdom to Decide.

For the longest time, my dad stayed around the Ang Mo Kio area.

The nucleus of my mom’s family, which we are closer to stay in the east. When they wanted to get a place to stay there wasn’t much of a choice.

They don’t have stable money, and that meant they cannot fork out too much. So in 1985, they managed to secure a three-room HDB flat for $29,000.

$29,000 sounds like a challenging amount to pay back then. My adult memory of my childhood went back exactly five years old. My grandmother on my mom’s side took care of us when we live in my uncle’s five-room HDB flat before we eventually moved into the flat in Yishun ring road.

The house has nothing.

It wasn’t even sparsely renovated. Dad and mom could not buy everything in one shot. So they have to buy each item based on needs one by one.

There was no built-in kitchen cabinet. The stove was an external stove. Then came the sofa and then a little cabinet here for the room.

The 42-year-old Kyith will remember he was not too deprived when he was young back then. There were enough episodes that he wish for something but didn’t get a chance to get it. We never got our electricity cut off, or see any fights, or loan sharks among our neighbors.

Near 1995, mom and dad have the resources to pay off our mortgage but also had nearly $200,000 in cash. They decided to upgrade our place to the current five-room flat in Sengkang. That meant taking on a mortgage again, plonking half our cash into something illiquid.

They secure our Sengkang flat shortly before 1997, at the height where property prices were at their highest. Prices of HDB flat went as low as 40% below our purchase prices for years.

Last month, we paid off the last installment of our 25-year mortgage.

A couple of months before, I told dad that we were about to pay it off. As he was lying there, I wonder if he wondered anything about paying off the mortgage.

He worked on the renovation of our five-room flat personally because he was a contractor. We spend nearly $30,000 on the renovation despite not needing to pay any margins for the work cost then. I felt it was too large of spending back then if I were, to be honest with our decision today. Once the renovation was completed, all the contracting jobs dried up.

So we had to live off the money from savings for the rest of the period. Reflecting back, I vaguely remember how the fxxk we survived back then.

I wonder how much mom and dad thought about our five-room flat when they were fighting for their lives in the last moments. Mom told me before… dad decided at the last moment to move up from a four-room to a five-room. Had we stayed with the four-room decision, we won’t have had a mortgage and would have had less stress during the period when dad doesn’t have jobs and my brother and myself were not productive yet.

If you are not the one paying the mortgage you might feel less stress.

And maybe you are less connected with the mortgage. Since 2004, I have been the one paying the mortgage. Perhaps in dad’s mind, the mortgage was a non-factor for a long time.

The mortgage became part of Kyith’s money story.

There may always be Some Struggles with your Home Purchase somewhere

I reflected more deeply on housing struggles because of the recent conversations and discussions I observed in my own Telegram group as well as the 1M65 Telegram group.

A large part of the discussion was about:

  1. the struggles of securing a built-to-order (BTO) as a young couple,
  2. how prices of HDB are tied to the open market, which is influenced by private property prices,
  3. government putting the responsibility on us in our home selection and taking less responsibility that their policies are the reason why things are “so bad” now.

Our median salary has moved up to $10,000 a month, which means our annual salary, inclusive of employer and employee CPF is nearly $120,000 a month.

Here are the more recent resale prices for 4-room and 3-room HDB flats:

4-room HDB prices
3-room HDB prices

I got this suspicion the data do not include cash over valuation, which mean actual prices can be higher.

Four to five-room twenty-five-year resale flats like mom and dad’s range from $500,000 to $600,000. Three-room resale flats seem to be either $350,000 to $450,000.

If you are starting work earning $3500 a month each, a reasonable annual income is $91,000. Four-room and five-room resale flats cost more than five times the price-to-annual income, which means resale flats may not be considered very affordable to a young couple.

But as a first-time buyer, there are CPF housing grants and Enhanced CPF housing grants to tap upon. You can refer to this Dollars and Sense article for more info. The combined potential grant for the four-room resale HDB below is almost $110,000.

This might move four-room flats to the less than five times price-to-income range which means relatively speaking, flats are more affordable. The government tried to do what it can to stem property price increases with data that might not always be most obvious to Singaporeans.

I guess the topic of home affordability will always be a popular, but important debate topic. It riles up people and I do see certain people in the Telegram group trying to rile people up by promoting this debate.

Dad and mom, and our shared experiences tell me that there will always be some sort of struggle.

The question is what kind of struggles we are talking about.

If you need to form a family nucleus but wish to live away from your parents, yet with limited resources, is a three-room HDB flat a poor choice?

Yes, eventually you may not have enough space and you need to upgrade, but that is your struggle.

Or do you wish to force things by getting a five-room in a matured estate, then add renovations & furnishing and struggle with those periodic payments, and stress to keep both your jobs?

The grant might take a resale three-room down to $300,000 for a couple earning $91,000 a year. That will take the monthly mortgage payment for a $255,000 loan to $850 monthly, which is 12% of their combined income.

I think that is reasonable.

The valuation of mom and dad’s place is $570,000. If we assume a 15% downpayment, without grants, and the conservative way is to keep mortgage payment below 35% of combined annual income, then the minimum income to purchase such a five-room HDB is $4615 monthly.

If you purchase mom and dad’s place, you have less margin of safety but by conservative metrics, you are still ok.

But I feel that you will always have some sort of life and housing struggles you have to deal with.

To put it into context, the difference is almost $100,000.

A couple’s personal balance sheet will contain the combined, discounted cash flow of all your wife and your future income. It is likely going to be more than $100,000.

Here is a non-exhaustive list of struggles people contend with:

  1. Someone who doesn’t have enough has to consider between a 3-room HDB or 4-room HDB
  2. Someone who could not get BTO after 7 tries need to decide whether to forgo the lucrative BTO lottery for a market-priced HDB
  3. If you buy a 3-room resale HDB, it is much bigger, and you may eventually need to upgrade. When will that be? Perhaps 12 years away. Your life situation may be dramatically different. You may now be in the six-figure income range and your options are different.
  4. Even if you have a 4 or 5-room HDB, you struggle with the decision to upgrade to a condo or channel into other investment wealth machines.
  5. Then when you buy a condo, years later, you may struggle with the decision to see how to bypass ABSD and TDSR to get another condo.
  6. Then when you have a condo and another condo on a mortgage, you worry about whether your job is secure to pay the mortgage with your less-than-secure work situation.
  7. Someone may also consider whether to shift away so that their kids can be closer to their school.
  8. If you successfully paid off your 3-room HDB, then your stress would be: what will be my wealth machine to give me financial independence?

There are decisions to be made and we all hope that we make wise financial decisions.

Had mom & dad not decided to get this five-room flat, we might have had less stress during those tough periods. But my brother and I might grow up in a different way. If my dad’s sole income is so variable, then taking on a mortgage is risky but we did the prudent thing by paying a larger proportion with a cash downpayment.

Here is what I feel:

The ideal situation is to secure a build-to-order four or five-room flat, close to parents or in a prime location. That gives a good balance of enough space to have two to three children, earn from the BTO lottery, or be able to sell with a meaningful profit to have life optionality.

Beyond this, it is a less-than-satisfactory lifestyle.

Since everyone can agree on this, then if the government doesn’t help preserve this for us, they cannot say they are a first-rated government.

This may be what the debate is about.

But I just feel like you will always have that struggle.

Life takes you in other directions.

My friend Samuel may have at one time struggled with a 3-room HDB flat that he might outlive, if he thinks from the financial independence angle. But since his recent trips to some countries, the minimum lifestyle he could accept dramatically shifted.

Many of my friends from my generation started from wondering if they can pay off their mortgages, to the problem of whether they should upgrade their place, combining their residential needs with investments to secure their retirement.

You hope to be free from financial worry, and you hope the government can do that for you. But there will always be some tradeoffs that you need to make.

And I have seen people with good incomes, make financial decisions that made them impair more than $100,000. Net-net it means you also didn’t benefit from it.

There will always be some money struggles you need to contend with. Seldom can we be worry-free.

I invested in a diversified portfolio of exchange-traded funds (ETF) and stocks listed in the US, Hong Kong and London.

My preferred broker to trade and custodize my investments is Interactive Brokers. Interactive Brokers allow you to trade in the US, UK, Europe, Singapore, Hong Kong and many other markets. Options as well. There are no minimum monthly charges, very low forex fees for currency exchange, very low commissions for various markets.

To find out more visit Interactive Brokers today.

Join the Investment Moats Telegram channel here. I will share the materials, research, investment data, deals that I come across that enable me to run Investment Moats.

Do Like Me on Facebook. I share some tidbits that are not on the blog post there often. You can also choose to subscribe to my content via the email below.

I break down my resources according to these topics:

  1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
  2. Active Investing – For active stock investors. My deeper thoughts from my stock investing experience
  3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
  4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
  5. Free Stock Portfolio Tracking Google Sheets that many love
  6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
  7. Providend – Where I used to work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works
  8. Havend – Where I currently work. We wish to deliver commission-based insurance advice in a better way.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Sunday 12th of February 2023

I think young couples now think they are entitled to living in at least a 4 room flat in a prime estate.

But there's no minimum standard of housing that the govt is obliged to give its people in any country. Logistical difficulty. If everyone wants to live in prime estates, how can we fit every Singaporean in prime estates? And how did generations change so much ghat young people want to forgo economic struggle?

Good points Kyith. Kudos for taking on the mortgage.


Sunday 12th of February 2023

HI Aaron, perhaps not prime. Prime is necessary if the parents are in Queenstown. I have friends who wrote to their MP for situations like that. But i am not sure how to look at it. Are they thinking of needs or taking advantage just becaues they have that need?

For the longest, time we took for advantage that 4 room flat prices were so reasonable.


Sunday 12th of February 2023

Housing is a very political and polarising issue in Singapore (and probably elsewhere too). When the prices are high and supply low, the have-nots get aggravated while the haves keep quiet. The reverse happens too in troubled housing markets, but people have short term memory, so they only focus on the present. Anything that can help vent at something outside of us (e.g. the government) gets magnified. And housing is the peak of all these because it is such a big part of our lives and finances.

I like how you have put it: there are many struggles in life, and paying for housing is no exception. In fact, my opinion is that the government should have done better to control this earlier, which is why we see them rushing to do so much now. But I think compared to other countries, we are doing well enough already. The median price-to-income ratio, the large % of people staying in owned flats, and the internationally-envied public housing scheme should be a clear objective sign that Singapore is near the top, if not right there.

My conclusion is that while the housing supply and pricing situation is not great now, I think we can all do with a greater dose of gratitude for where we are. And I only hope that when there comes an eventual decline in the housing market (which I believe is inevitable as with all asset classes, the only question is gradual or drastic), people do not forget that what they are clamouring for now might be a big contributor to that decline later on.


Monday 13th of February 2023

@Kyith, it’s true they are fighting multiple fronts, last time was the decaying lease that was depressing housing prices. Hard to please everyone. I was thinking they could have built ahead of demand (even if they end up with some excess stock; is it really THAT bad?), but hindsight always 20-20 (including mine haha). Maybe you’re right that they already did what they could…


Sunday 12th of February 2023

Hi KY, you wrote in a succinct manner, better than I could. I agree with what you said. I do often wonder that when they are fighting at so many fronts, should they have done more to be proactive then preemptive? I think not much they can do.

This site uses Akismet to reduce spam. Learn how your comment data is processed.