I suddenly don't feel like owning a house

I have been think about it recently - Is the government's public housing programme a boon or a bane for the average Singaporean.

Singapore prides itself as providing affordable housing for everyone through the developments of HDB flats. But the way I look it, home ownership is as much as becoming slaves of property loans.

The average rates for property loans is about 3.5% per annum, and if you take up a loan from the HDB at a concessionary rate of 2.6% per annum, you are at least paying interests upwards of a few thousands dollars.

Imagine buying a flat for $250,000 making a downpayment of 20% with your CPF.

Remaining sum to be paid = $250, 000 x 0.8 = $200, 000
Interest = $200, 000 x 2.6% = $5,200 per annum!!

This is by no means a small sum, especially for the lower-income middle class. If I were to earn $30, 000 a year, it means that 17.3% of my income per annum goes towards servicing my home loan. I shudder at the thought.

Using the financial calculator at the HDB website, the monthly installment comes up to $801 for a repayment period of 30 years at 2.6% per annum. Or it translate to paying $801 x 30 x 12 - $200,000 = $88,360 worth of interests!

Alternatively, I do know that one can probably rent a 3-room flat in a HDB estate further away from the CBD for $600 - $800 a month. In a year, the rental is between $7,200 to $9,600.

Certainly, renting a HDB flat makes more sense than owning one. Remember, thus far, I have only illustrated with HDB concessionary rates, and the interests that you are paying will be more if you are thinking of buying a bigger property and taking up bank loans.

People are oblivious to the amount of interests they are paying because most people service their HDB mortgage payments using their CPF monies, and this is one very big reason why Singaporeans are left wanting in terms of their financial nesteggs even though the government puts in place a system of compulsory savings throughout their working adulthood. Just a gentle reminder, CPF Ordinary Account pays 2.5% interest per annum, while the HDB charges 2.6%. See the picture?

Of course, the arguement that property is an asset is true to a certain extent. But it is not an easily liquidable asset. And considering that HDB market is pretty saturated, I can't foresee a capital gain by investing in a HDB flat. Pout.

If we use Robert Kiyosaki's definition, then that flat you are sitting on is a liability because it takes money out of your pocket every month.

This idea is crazy, but I am really tempted not to be drawn into the trappings in the name of home ownership. The extra $88k can be better invested and if you are shrewd enough, you can make returns more than the value of your HDB flat. How, though?

That's a question that I am very interested in as well, but am not yet in a position to advise. For now, just, erm, invest!