CPF CHANGES AND ITS IMPACT ON THE AFFORDABILITY OF NEW HDB FLATS TO NEWLY MARRIED COUPLES

Abstract

Problems are like bananas - they come in bunches. Over the last few years, that has been the case. The attack on the World Trade Centre, SARS, Bird Flu and the war in Iraq are just a few of the many things that have taken a toll on the world economy in the last two to three years. In a bid to get Singapore out of this economic rut, the ERC proposed changes to the CPF contribution system to make Singapore "more competitive", to give us "an edge above the competition". But at what costs and to whom? The main focus of this paper is affordability of new HDB units to newly married couples. With the direct hit of the CPF cuts on income, the concern of affordability of housing became apparent. A theoretic scenario in which CPF contributions are kept status quo is created in order for a comparison with the actual implementations to shed light on the inherent impacts of such change. The paper also identifies which households and which subject groups are mostly affected. The heuristic approach adopted revealed that CPF changes decreases affordability across all planes but affects single-breadwinner households and middle to low-income groups the most.