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.
124 Comments
Based on my very amatuer understanding of this figure, I have one observation.
I wish to ask what happened to those whose income fall between $8117 and $16311?
You can’t buy a flat once you are above $8000 and you aren’t an “average” before you reach $16311.
Is everyone who earn between that amount over stretched then?
would be your answer
those in the heartland areas with avg prices from 500-700psf
But what up-ed the average income from $8000 to $16311?
Surely you need to have a whole load of very high income earners to tilt the figures this way.
who says you can’t buy a flat once you are above $8k? all PRs and citizens can always buy from the resale market regardless of income. it’s only if you want to enjoy subsidy that the $8k limit kicks in ($10k for ECs).
where are those between $8000 and $16000? simple – they are either living in 5-rm flats or in the lower end condos.
you can also ask the same question for the $3k-$5k or $5k-$8k gaps for 3,4,5 rooms hdb.
the gaps are bigger at the top because of the effect of tail-end distributions.
I’m a condo dweller. Family income only 12k. Is this far below the mean? Does it help if my condo is the mass market type?
i don’t agree you need a really high income to match a condo living. interest rates are so low, so affordability goes up.
my wife and i earn a combined $10000 and we just bought a $1.5m condo in a good district. mortgage installment is $4k-plus per month, about half is paid out from our CPF. we pay only about $2k in cash.
we figure that even in the worst of worst situation, we can easily bail out by selling the condo since it’s in a good district.
dont get too worry if u stay in condo and fall below the $16,311 average, it is juz an average income for people staying in condo which house price can be ranged from $500K to $5m, if your debt ratio is low then it is ok in my opinion.
I think far below average means not being able to spend like your neighbours.
I also think if you poll HDB districts like Bukit Merah, Queenstown, Toa Payoh, Kallang, etc., you will see the majority of people between the 8k to 16k region.
My guess is that the profile between 8k and 16k region are those staying in 500-800k apartments, be it HDB or Condo.
They ought to break up by asset value rather than HDB and Private. It is an artificial separation that the government created. I also think they should segment the income categories until 15,000. The more than $10k is more than 20% of the households.
Also, you do not need a whole load of high income earners to tilt the data this way. To show an extreme case, try imagining someone earning 1 million a month and 9 earning 10,000. The average of this 10 would be 109,000.
ek888, the problem with debt ratio is that it doesn’t take into account many things, eg job security, interest rate rises and commitments like parental care & hospital bills. playing it safe, i did not include my wife’s income when i calculated our debt service ratio. it’s only when we’re absolutely convinced we’re living well within our capability did we buy our first condo.
not applicable to those born with silver spoons in their hands and mouths.
what if interest rate goes up? are you prepared for it?
Kevin made a good point–this is why typically median is more meaningful for this kind of studies.
The salary stated is gross or take back pay?
and does this include bonus?
should be gross pay.
may i know whether one can buy from hdb direct (like those bto projects) if the person has property overseas? income level can still make it below $8k for buying direct.
any advise most appreciated.
thanks.
if you say you have property overseas, you cannot buy HDB with grant
I have many friends making 20K+ and living in HDB. They also bought a condo and rent out for income.
My household income is 10K+ and i can’t qualify for HDB but do not have enough $ for condo. I am very bitter about this. I am almost 30, ready to get married and make babies for the nation. However, i have no home. I am not sure how long i have to wait. Contrary to many reports on singles find it hard to get hitched, it seems easier to get my Mr Right than afford a home for me.
I do not understand why the 8K cap on HDB is imposed on point of application. I suggest to have a set of hybrid conditions. Eg. If you are below 35, the condition does not apply. If you are above 35, the income cap conditon applies. Also if your household income exceed certain level, eg. 20K and above, you have 1 year’s notice to vacate your flat.
Can i check if there is a way to review the policy? Eg. To allow all Singaporeans below 35 years whom are trying to set up their homes a chance to own their flats (regardless of income)? Its like an entitlement of a Singaporean. And those who made it big (eg. earn 20K) will have to vacate their flats and make way for those whom need an affordable flat.
As my biological clock continues ticking, I seriously hope the the policy can be reviewed to help young Singaporeans with combined income more than 10K but less than 16K but with less than 100K of savings, to have ownership of an afforable HDB flat.
Meanwhile, setting up a home with children remains a dream for me, us,.. and the nation…
Also, you do not need a whole load of high income earners to tilt the data this way. To show an extreme case, try imagining someone earning 1 million a month and 9 earning 10,000. The average of this 10 would be 109,000.
I agree with Kevin on the statistics part.
I think the MEDIAN figures should be released.
I am aware that people with more than 8K can purchase re-sale flats.
However, resale market is pretty hot and may cost 2 times more. Eg, buy a 5 room from HDB at 300K, resales cost 600K.
$600K for a 20 year loan would means $30K a year, meaning $2,500 a month excluding interest.Assume after interest is factored in each month is about $3000. Divide by 2 means each person pays $1500.
If a couple with gross pay $5500 each, take home pay $4400. Based on my expenses that i have been tracking for 3 years below are some very real figure and I believe that i do NOT live an extravagent life style.
Food 500
Shopping and entertainment (1) 200
Basic necessity (2) 200
Transport 200
Tax 175
Gifts/ Treats (3) 200
Fees/ Course/ Gym (4) 100
Medication (5) 50
Insurance 500
Parents 500
————————————
TOTAL 2625
(round up to 2600)
————————————
(1) Shopping/ Entertainment is kept to the minimim and it includes things like movies, shopping for clothes, bags, shoes, small little gifts.
(2) Basic necessity includes things like soap, tissue paper, washing powder, contact lens solution, flooe cleaner, facial wash, shampoo, etc
(3) Gifts / Treats includes things like house warming gifts, baby shower, ang pow for people wedding, collegue kopi money etc
(4) Fees/ Course/ Gym are payments for exercise facilities or dance courses to maintain healthy life style.Or any courses that helps self improvement, eg. a 3 month business chinese course etc.
(5) Medicine includes money spent on vitamins, plaster, muscle rub. Although there is company benefit for GP and specialist, there is co-payment component.
For each person:-
Take home pay -4400
Personal expense -2600
Mortgage and interest -1500
—————————-
Left over $300 x 2 = $600
The LEFT OVER IS ONLY $600 for whole household. Should this $300 go to Utilities bill, town council fees, TV licence, etc ?
How about the baby?
No wander we cannot afford children…
Conclusion:
The resale value of HDB is 2x the price from HDB. But the salary if not 2x. We should review the cap and assist the group that seems rich (make more than 10K, less than 16K) but have only $600 left each month.
10k < x < 16k: Why don't you buy a resale? There must be some strict rules you are not willing to sacrifice (e.g. location, non-resale).
Hi Not true,
I suffer the same fate as you. Can i check what happens when you sell the condo? Where will you be living?
>$600K for a 20 year loan would means $30K a year, meaning $2,500 a month excluding interest.Assume after interest is factored in each month is about $3000. Divide by 2 means each person pays $1500.
Don’t forget you can use CPF to pay the mortgage installments. If you don’t have luck with the balloting and can’t wait, go for a resale. In my opinion, your income level is more than sufficient for a resale HDB.
I thought the rough thumb rule price from HDB is 60K below the current valuation price.
Assuming the sellers are greedy and ask for 50k cash , the difference between HDB and resale will only be 110K.
Unless the HDB you are eyeing less than 110K, the resale price will be less than 2x from HDB.
Maybe you are getting your data mixed up without considering time. For example, I know of two separate relatives who bought Duxton plains, one at 3xx k and another at 5xx k from HDB. If you take the resale at Duxton Plains (5 years down at today’s prices) for 600k, then you will come up with a 2X price against the 3xxk purchase made a couple of year backs, which while comparing apples to apples is not comparing them at the right time.
If you go outside the popular location, then the difference would be even less.
Hi Kevin,
I have thelessmia, hole in heart and MVP. I have faint and vomit in the crowded MRT twice a year. (Thanks to all the public that has helped me). Giving this situation, i cannot stay at a place too far out.
Anyway, even if i am willing to sacrifice to live far apart, since my parents are seperated, So i will have to live near pasir ris where my other half’s parents are. (Better to live nearer to someone in case of emergency, especially for children.) Is living pasir ris a big sacrifice already? The last time we asked about prices, we are quoted 600K.
Dear buy resale,
you mean even if you make more than 8K, you can buy resale from HDB and go for balloting?
I am a little confused. Please advise.
Dear Kevin,
i am not looking at Duxon, i am thinking of Kovan/ Hougang/ Buangkok area.
On cutting back and basic necessities…
I know I can still cut, because my loaf of bread is twice the price and half the quantity of some of the breads other people buy when I queue up at the NTUC check out counter.
I live in Pasir Ris, having shifted from Holland. I am starting to like Pasir Ris a little better than Holland. I thought I would be sacrificing in the past too when I moved.
Pasir Ris 4 rooms is still fairly affordable for your household income and spacious too! I live in one of those exec condos and the size of my exec condo is the size of Pasir Ris 4-room (~100 sqm). I have a family of four.
Can’t help to ask. What is MVP.
Dear Kevin,
i already chew on a loaf of bread for breakfast for 1 week. $2 per week for breakfast. My collegues all admire me for that.
As mentioned, since my parents are seperated, i have to survive 3 meals outside. $10 x 30days = 300 + 4 loaf of bread + occasional lunch at cafe with collegues and friends and share cost = $500
You do not think this is reasonable?
Unless you want me to cut down on social life and eat alone every day at food court? Tell people i don’t want to meet them for gathering at Swensons, new york new york, HK cafe, i only meet people in food court???
Even Mcdonalds more than $5 for a meal now a days. Can eat the $4.50 lunch promo only.
My bosses’ 16 year old daughter gets more pocket money than me. She was amazed and shocked that i survive on $10 a day already.
Dear Kevin,
MVP is mitral valve prolapse. Heart valve abnormality.
Sometimes i think i am like a “defactive good”. All my conditions are congentital… meaning presents from my parents. Sometimes i think they should not even give birth to me!
And to cut down on expenses, my the other half cycled to MRT… and got a fine from the Police !!!
Sigh… really desperate on saving money liao
If i can eat 1 loaf of bread for 2 days, i will…
But the expiry date is 1 week… i tried doing that once and found green mouldy things on the bread… i quickly throw away and washed my mouth…
Dear More than 10k…,
Don’t get me wrong on cutting back. I meant to say given your household income, you may think you are spending the minimum but there is always a way to cut back even more, without sacrificing the necessary nutrition and emotion/social well-being.
I don’t think I will cut back on my loaf of bread just yet! I go to restaraunts very ocassionally and my colleagues are past the age of eating in a nice place. I met an ex-colleague in a hawker center to catch up the other day.
Also comparing with your office colleagues is not a good representative sample. They are likely to cloud your impression that everybody is as rich as that in Singapore. I am relatively middle-ranking in my position in office but I know I am likely the poorest because even the admins have cars and rent out private properties.
Maybe my point is don’t be too frustrated, settle for less and be happy! 🙂
Dear Kevin,
i don’t mind settling for less… the problem is no point me trying to save $1 or $2 here…
When the biggest issue is i am paying 600K for a resale flat. Is there a way out?
Can i resign and take go for a job with a pay cut of $1K, so my household income can be less than $8K and then i can buy a $300K HDB?
Is this the only solution?
I am not frustrasted… i am desperate…
Sorry I didn’t think properly. You can’t go for balloting. But I’m puzzled why you feel poor when other families making less than you are ok. A household income of >$10k is already quite ok. I would advise you to just bite the bullet and go for the 600k flat if you like the location. Again, don’t forget you can use CPF for the mortgage installments, with a little cash top up. To lessen the monthly load, you can consider stretching the loan to 30 or even 35 years. Good luck.
Dear buy resale,
This is why i am poor…Although i have 10K+,after paying $600K for a flat (when people making $8K are paying $300K), the household is left with $600 for utlities, conservation fees, TV license, no travel, not even to batam and NO BABIES…
Recap:-
$600K for a 20 year loan would means $30K a year, meaning $2,500 a month excluding interest.Assume after interest is factored in each month is about $3000. Divide by 2 means each person pays $1500.
If a couple with gross pay $5500 each, take home pay $4400. Based on my expenses that i have been tracking for 3 years below are some very real figure and I believe that i do NOT live an extravagent life style.
Food 500
Shopping and entertainment (1) 200
Basic necessity (2) 200
Transport 200
Tax 175
Gifts/ Treats (3) 200
Fees/ Course/ Gym (4) 100
Medication (5) 50
Insurance 500
Parents 500
————————————
TOTAL 2625
(round up to 2600)
————————————
(1) Shopping/ Entertainment is kept to the minimim and it includes things like movies, shopping for clothes, bags, shoes, small little gifts.
(2) Basic necessity includes things like soap, tissue paper, washing powder, contact lens solution, flooe cleaner, facial wash, shampoo, etc
(3) Gifts / Treats includes things like house warming gifts, baby shower, ang pow for people wedding, collegue kopi money etc
(4) Fees/ Course/ Gym are payments for exercise facilities or dance courses to maintain healthy life style.Or any courses that helps self improvement, eg. a 3 month business chinese course etc.
(5) Medicine includes money spent on vitamins, plaster, muscle rub. Although there is company benefit for GP and specialist, there is co-payment component.
For each person:-
Take home pay -4400
Personal expense -2600
Mortgage and interest -1500
—————————-
Left over $300 x 2 = $600
The LEFT OVER IS ONLY $600 for whole household. Should this $300 go to Utilities bill, town council fees, TV licence, etc ?
How about the baby?
No wander we cannot afford children…
Conclusion:
The resale value of HDB is 2x the price from HDB. But the salary if not 2x. We should review the cap and assist the group that seems rich (make more than 10K, less than 16K) but have only $600 left each month.
>Divide by 2 means each person pays $1500
About $1k can come from your CPF Ordinary account, so it’s just about $500 cash from each take home pay. As a couple, you will have $2k cash for batam and babies. 🙂
further, your take home pay should be $4,600 because employee’s CPF contribution is calculated based on the cap of $4,500. 20% x $4,500 = $900.
I hope my cpf can pay for it….
We wiped out cpf for investment due to the min $20K rule. Investment not making $ due to down turn. May be we are the ‘suay’ couple of the year..
So using max mthly contribution $4500*14.5%, some goes to medisave, sa, etc
I am left with $500++ from CPF?
May be batam… no babies…
and hopefully don fall sick… cos no insurance cover congenitial conditions =(
further again, I find $500 per person per month for insurance is a little high. That’s 12k per year as a couple. Perhaps after you buy the HPS insurance for your resale HDB, you can consider cutting down on insurance so you have more money for savings and babies.
To summarise my advice for you:
1. stretch loan to 35 years.
2. use as much of CPF ordinary as possible to pay for installments.
3. buy HPS and cut down on insurance.
This will at least give you a couple thousand dollars more per month.
or buy a smaller flat. 🙂
buy resale: really depends on individual and their circumstances. My monthly insurance is about $1k because i’m at my prime working life and need protection for my family and young children in case of unforeseen events. Of course I also need to balance that with savings and investment portfolio.
more than 10k : not saying anything bad about your situation but it’s a sad commentary on our housing affordability when someone like you has problem getting a home.
I’m praying for you that it works out and you can setup a good family soon.
Just to share with you I also faced the same problem when I was younger.
I bought a resale flat and took on a huge loan since my salary was above the $8k cutoff way back during the last housing peak.
It’s in those out of prime areas and i’m below water.
Anyway i’m ok with it since i don’t have condo-envy and doesn’t like living close to town anyway.
I have not been to ION and doesn’t remember the last time i walk in Orchard road.
I have been paying the insurance for past 5 years. You are not suggesting that i terminate one of the policies now and waste more hard earn money right?
what are the conditions to stretch loan to 35 years?
I hope all can recall that i have 3 major health conditions thus high insurance premiums…
seems like all agree with the 8K cap for HDB? do ur not think the policy shd be reviewed? May be to 12K and limit to aged below 35 and 5 rm and above?
May be i shd just change jobs, get a pay cut of 1K and get a HDB…
problem solved?
According to the Salary.sg Household Income Comparison Tool, the 80th-percentile household makes about $11,300/mth. Servicing a $3,705/mth loan is much more reasonable at this income level, as the debt service ratio is now a comfortable 33%.
I guess the 8K limit shd be reviewed to $11300?
more than 10k: personally i wouldn’t downgrade myself unless there’s a logical reason for it.
Growing your income is better than cutting expense especially if you are having a good career.
That’s my personal opinion anyway.