HOW WOULD THE DEPRECIATION OF VALUE AFFECT THE FINANCIAL PLANNING OF HDB AND FREEHOLD PROPERTIES OWNERS?

Abstract

The percentage of homeowners in Singapore is one of the highest in the world due to its excellent public housing system. As Singaporeans have their retirement savings tied up in housing, they are vulnerable to the volatility of the housing cycle as seen from the housing recession caused by the regional crisis has made homeowners worse off. With large amount ofCPF savings being used to purchase homes, what remained may hardly provide sufficiently for old age. Therefore, this study sets out to investigate whether the depreciation in value of houses would affect the financial planning decision of the owners. The study was based on analysis of literature review and data collected from surveys of HDB flat and freehold property owners in Singapore. It was found that the issue of depreciation in value of properties would not affect the HDB and freehold property owners' financial planning decision The study also revealed that HDB flat and freehold property owners would behave differently in the aspect of financial planning when placed in a house of an alternative tenure.