X-Hunting #10 - HDB 8K Rule, Smart or Dumb?

In the Straits Times today:

The second batch of public housing being offered by private developers goes on sale tomorrow, one year after the first lot was launched due to overwhelming demand.

Giving a sneak peak of showflats at the development called City View @ Boon Keng yesterday, developer Hoi Hup Sunway Development said it is offering 72 three-room flats, 168 four-room flats and 474 five-room flats - housed in three 40-storey blocks.

3-room flats are priced at $349,000 to $394,000.
4-room flats are priced at $523,000 to $597,000.
5-room flats are priced at $536,000 to $727,000.
On the average, they are going for $520 psf.

Their prices are wedged between those of resale Housing Board flats and those of private 99-year leasehold condos in the same area.

A five-room, 11-year-old HDB flat near the project site changed hands for $545,000 in November, for example, while units at private condo Kerrisdale in Sturdee Road sold for $731 psf to $786 psf late last year.

Other similar developments - which could house about 2,500 more units - are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok.

My thoughts:
This DBSS at Boon Keng is considered quite an expensive development! To buy directly from HDB, families income must not be more than $8,000 a month. Can families with household income of $8,000 and less easily afford these units?

Let's say we calculate by the norm. 5% cash 15% CPF.

5% of an average $550,000 is $27,500 (cash) don't forget it is cash!!! Another 15% from CPF $82,500 for downpayment. Total cash + CPF paid up is $110,000 and the balance is $440,000.

For loan amount of $440,000 at 3.35% (quote for HDB flats) @ 30 years, the monthly repayment is about $1,940.

This means a hypothetical couple earning $8,000 needs to come up with $2,000 cash every month - that is a hefty one-quarter of combined earnings going to the housing loan!

I think HDB gives a lot of perks for first-timers. If I'm not wrong there is a HDB concessionay rate of2.5% for first timers, if that's so, then the cap rule still makes some sense. If not, HDB should seriously look at this dumb 8k rule in this booming property market!

My cousin is thinking of applying for a unit in City View with her boyfriend. She's thinking of not starting work till much later so that their combined income reflects less than $8,000. Not sure how HDB works this out and I'm sure they are not stupid, but here are my questions:

(1) How long must the combined income of less than 8K be valid before they can qualify for a new flat?

(2) Between the time of downpayment till the flats are ready in a few years time, what if the couple's income crosses the $8,000 mark?