I’m not sure about you, but the boomers I know have really been taking a shit on us millennials for the past few years. They accuse us of being lazy entitled snowflakes, wax lyrical about a war they didn’t live through and talk about how hard their time used to be.
There’s some truth in that, no doubt. Lazy millennials exist. And Singapore’s developed economic status wasn’t an easy badge to earn, either.
But yesterday’s good advice is today’s fake news. Some things that were applicable back then, simply don’t work now. Here are some examples:
Annoying #1: “Why you so old still don’t have a house”
Sure, the starting pay for diploma grades used to be as low as $1,500. But four-room HDB flats used to go for as low as $80,000 in the 1980s. These days, a degree holder starts off at $3,200, but those four-room flats start around $340,000. Salaries have increased by approximately by two times. Property has increased by at least four times.
And boomers are ALSO the ones who’ve profited the most off it.
Annoying #2: “Why don’t you buy a condo? If you work hard you can buy one. Don’t be lazy.”
Except in the past, loan curbs were less savage, and Deferred Payment Schemes (DPS) were everywhere. Back in 2008, it was quite common to use the DPS to put down 20 per cent of the property price, and then you could wait two whole years before you even had to pay another cent (there are still DPS schemes today, but they are much less common).
And then in the last round of cooling measures in 2018, the Loan to Value ratios were dropped to 75 per cent – and just in case the five per cent sounds inconsequential, it’s not.
After all, five per cent of an entry-level million dollar condo is $50,000. Not a small amount indeed.
(Loan curbs are not a bad thing as they ensure affordability, and it’s healthy as part of the big picture. But that doesn’t change the fact that it makes it harder to get financing for a condo).
Going back to the first point, the whole boomer generation were also able to raise the capital by selling the HDBs they were living in for quadruple the buying value.
Today, that’s virtually impossible. Wake up your idea, boomers.
Annoying #3: “You can rent out your condo to pay for it. Very easy one.”
In the property heydays of 2013, people used to talk about condos as cash-generating assets, with sky high rental yields above five per cent – you expected to have money left over after paying costs.
But the rental yield for condos today? Between two to three per cent for most residential units. Rental income has fallen by close to a quarter. At the same time, the prices of condos have gone up roughly 15 per cent. Rental income decreasing. Price of condo increasing. Not a good combination for prospective landlords.
Couple this with all the other costs a condo carries – such as quarterly maintenance fees of around $1,200 to $1,400 per month, the rental income may not even cover your costs. You’d bank on capital appreciation to make money, and that’s speculative.
Annoying #4: “Last time I make a lot of money from BTO.”
Once again, whatever your mom/dad/uncle/horse is saying is based on the astronomical growth of BTO prices in the past. BTOs were introduced in 2001, and the explosive resale growth of HDB flats halted in 2013 due to a variety of factors, including the ‘99-years-saga’, VERS, COV and the government repeatedly implying that HDB is a roof over your head, not an asset/investment.
But those days of trading HDBs like commodities?
They’re way, way, over.