IMPACTS OF THE DECREASE IN EMPLOYERS' CPF CONTRIBUTION ON HOUSING AFFORDABILITY OF HDB HOUSEHOLDS

Abstract

Since its implementation, the Central Provident Fund has spawned a great number of uses, evolving to adapt to the changing socio-economic needs of Singaporeans. The lives of a large proportion of Singaporeans are in fact intertwined with the CPF scheme, as people use the CPF funds to purchase properties as weil as for investments. On Is' of January 1999, the Singapore Government implemented a cut in employers' CPF contribution from the original 20% to 10% in attempt to help reduce business cost and to revive the economy from the regional economic crisis. As housing affordability is an important issue in Singapore, the possible effect of the CPF cut on affordability of housing will be of significance. This study attempts to ascertain the effect of the CPF cut on HDB households' affordability of housing. Other than analysing the factors that will significantly affect affordability, it is hoped that the findings will provide an insight on how certain government measures like the CPF cut will affect housing affordability as the latter is of great concern to Singaporeans. A Survey was conducted with 200 households in randomly selected housing estates to collect the information needed for analysis. The survey consists of a 3-page questionnaire and personal interviews as well as mailed questionnaires are used for data collection. Chi-square tests and correlation analysis were then generated to analyse the data collected. The Findings indicate that through the use of four different measures of affordability, different results are obtained and it is found that cash availability, household income and job stability are the important factors of housing affordability. Furthermore, the study also shows that the CPF cut has more impact on HDB movers as compared to the non-movers and it seems that most of the impact sufferers belong to the two to middle income households. Hence, it is important to have supplementary plans to alleviate impacts of policy changes.