Does Your Income Match Your Housing Type?

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Many people often wonder if they can afford to stay in private housing. There are various ways to find the answer. You can ask a bank, calculate your debt ratios, use our 7.6x guideline, or compare your income with the average income of your desired housing type – which is the main topic of this article.

The easy way is to ask your banker. But if you and your spouse are working professionals with stable incomes, your banker will most likely grant you the loan even if you will be overstretching yourselves to pay the loan installments. See how a couple got saddled with a property loan they can hardly afford.

To be safe, we recommend you carefully consider your condo purchase (or landed property purchase). Read our articles on debt ratios and 7.6x guideline, and do your sums properly. And with the recent release of the Household Expenditure Survey (HES) report by the Singapore Department of Statistics, there is one more way to confirm if you’re suited for a certain housing type.

According to the HES report, the average monthly household income of families staying in private housing is $17,795/mth.

Families staying in landed properties make an average of $20,427/mth, while those in private apartments (including condos) earn an average of $16,311/mth.

If you and your spouse earn far below these amounts, you have to at least be aware that you will be far below average.

If you stay in HDB or plan to buy a bigger HDB flat, here are the numbers for you to do the comparisons:

  • 1- and 2-room HDB flats – average monthly household income is $1,186
  • 3-room HDB flats – average monthly household income is $3,503
  • 4-room HDB flats – average monthly household income is $5,114
  • 5-room and Executive HDB flats (including maisonettes) – average monthly household income is $8,177

See also Leong Sze Hian’s observations on the HES report.

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123 Comments

  1. middleclass,

    im dumbfounded by your reply.

    it is totally untrue to deny that my suggestion has no bearings on our discussions on housing. sometimes we tend to overlook and underestimate things to be small n irrelevant.

  2. I think alot of people have FORGOTTEN what happened back in 2004. The property agents were screaming for help, sales were drying up, nobody was interested in property. Why? Because everybody HAD a house and things weren’t looking too bright.

    Next came LKY…with the introduction of increase in population via immigration. BOOM!…foreigners came in, in huge numbers, demand for property flew…buy buy buy….people started flipping properties. IR potential, talk talk talk…take take take.

    Now…another plateau…immigration policies changing to tightening mode (no more coming in), world economy in crisis…IR crawling. If people cannot see what’s going to happen next, then there’s really no medicine to help them.

    The property market is going to dive. Just watch the next 365 days. Those who bought houses through bank loans (especially private houses) last year are going to scream in pain.

    .

  3. to Anonymous: well said. couldn’t agree more. but things are too unpredictable nowadays, so let’s wait 365 days and see.

  4. Anonymous, there is no point saying all that, because if anything people have a short term memory and they always think that they are special.

  5. I think the government will do their best to ensure the property market will stay at this present level because election is around the corner. Singapore, like a lot of Asian markets, operates on what a layman like me will call “controlled” free economy, e.g., things can move independently but there are sufficient controls against significant movements.

    The tightening of immigration policies also signals a coming election to “appease” unhappy local citizens. Over the long run, with birth rates declining, I cannot imagine Singapore tightening immigration policy if we like to continue growing. I am also not very convinced of productivity improvements. As we move more into services, there is only so much transactional productivity we can strive for without hurting client relationships. And for quantum leap successes like Ipod or Wii, Singapore does not quite have the talent pool to come up with insanely great ideas.

  6. hdb desperate on

    Hi Poor but surviving,can you tell me how u write the appeal letter to get the flat when yr income exceeded 8k… i am in similar case too.. did u all ballot online or just write in directly??

  7. Poor but surviving on

    hdb despearate : just write an appeal letter to hdb stating your case and reasons why u “deserve” the grant/loan.

    do u n ur partner exceed 8k by a fair bit?

  8. LowIncomeWorker on

    Hi,
    I am earning 1500 a month, and my husband earning 1700 a month. We have 2 children. We are O’level educated and low income workers and living in 3 room flat. We do not have to resort eating bread daily, we do bring our children for outings weekly, we have insurances but we barely have savings. With people of 8k salary wanting to buy HDB flats, i worry that it may push HDB flats further. What will happen to people like me then?

  9. LowIncomeWorker on

    People with 8k salary can offer a better price than people like me whose combined income with hubby is only 3.2k . This will surely push resale flat even further. Im really very curious and sometimes it makes me laugh. How can a single person earning 8k per month cannot buy a 600k private housing? Please spare a thought for lower income people like me. We are poorly educated due to family financial circumstances, thus we have low salary. Please do not fight with us for subsidised flats.

  10. LowIncomeWorker :
    I appreciate your attitude . As your PM mentioned in one of his speeches, do ur best for ur children. Make sure they can succeed and do well. As far as house goes, good luck. It will be hard but i hope u can manage

  11. @More than 10K less than 16K:

    There are a couple of points I feel you have missed and no one seems to have caught.

    If you are making more than 10K as a couple, assuming each makes >4.5k, you will each get $1035 into your CPF-OA every month.

    Total contribution per month is $900 (employee) + $653 (employer). $1035 goes into OA, the rest goes into SA/Medisave.

    Login to your CPF and look at your monthly contributions.

    Another point, 4-room flats in Bedok are still mostly transacting at around $400k, with the flats built in 2005/2006 fetching nearer to $500k. Remember you can only take 80% loan, so even a $500k flat means a loan of $400k, spread over 30 years at 3.75%, means $1848/mth.

    Combined, you will have $2070/mth to pay your installment. You are definitely able to pay the installments using CPF alone, without cutting into your disposable income.

    You can check HDB resale transaction prices here:
    http://services2.hdb.gov.sg/webapp/BB33RTIS/BB33PReslTrans.jsp

  12. Hi HDB Desperate,

    I am in the same case with u!! Overshot by 675 🙁 did u appeal and gotten ur flat?

    I am intending to appeal but not sure how to… went to see EC but need a whopping 60k incl of stamp duty… its out of my reach…

  13. Poor bt Surviving: Just wrote to them ytd and got a bloody templated motherhood reply today.. not helping at all. Guess I have to make appointment with MP… but then again, read alot of negatives feedback on MP channel too 🙁

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  15. Hi, I’m earning $2.5k/mth averagely (more percentage of commission). With bonus etc will $3.5k/mth. Mom’s income as 6days/wk part-timer averagely $1.2k. Does anyone know how HDB calculate loans according to commission-based/ part-time jobs?? Cause I’m only granted to a 55% loan of my flat’s value. Tried appealling twice but failed, saying our salaries fluctuate. If that’s the case, why does the additional grant for low income citizens is granted as of earning more than 4k? Does that mean that property agents or insurance agents can only loan from banks or fork out full cash to buy flats? Please enlighten me… Thank you.

  16. hi,

    my sal is around 8k/month i have managed to save 80k
    i would be applying for hdb first time . want to buy executive hdb . how much more cash will i need to arrange and can i apply for personal loan as well.and what is the income ceiling limit. how much will my emi be if i buy property of 650k.
    i am a little confused s i thought interest is around 1.089% but some one here has mentioned 3.75%..

  17. Chelsey Young on

    The number one factor to consider when buying a house is your salary. Is it enough to pay for the monthly amortization? Another thing to think about is that if your career is stable enough that you will be employed over a long period of time. Because if your not sure of this, it would be unwise for you to purchase your own house.

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