It can be said that the Singaporean dream is own a property (or more properties if you already own one or find the holy grail hawker dish). In a time of rising property prices, the question becomes: what property can an average Singaporean afford?
While we have written about the salary we need to earn to afford the various property types in Singapore and the salary we need to earn (after subsidies) to afford the various BTO flat sizes, we have yet to write about what we can realistically afford based on the average salary in Singapore.
Before we get to the flats we can afford as an average Singaporean, let us clarify what is the average salary.
What Is The Average Salary In Singapore?
According to MOM’s Singapore Yearbook Of Manpower Statistics 2020 Edition, the average salary in Singapore is $5,549 in 2019. Before we all get up in arms about how high this number is, let’s examine the details.
For those of us who recall our math and statistics, there are 3 types of averages: mean, median, mode.
- Mode is rarely used because it refers to the most frequently occurring number in a set, which is not as relevant in this case.
- Mean refers to the total sum divided by the total number. For wages, this would be summing all the salaries of Singaporeans (including all the millionaires and billionaires) and dividing by the number of Singaporeans. This is why the Average (Mean) Monthly Earnings is so high.
- Median refers to the middle number when the numbers are sorted in order. For wages, the median or 50th percentile means that 50% of the population earns above or below this number. Median Gross Monthly Income From Work is also MOM’s recommended reference for the income of a typical worker.
The Median Gross Monthly Income From Work is $4,563 in 2019. This is for full-time employed residents, excluding full-time National Servicemen. However, this amount includes employers’ CPF contribution (typically of 17%). Excluding employer’s CPF contribution which is the usual way we view salary, the average salary is only $4,000 in 2019. This is more than $1,500 lesser than the Average (Mean) Monthly Earnings.
(Editor’s note: an earlier version of this article stated that the average salary is $4,563 which includes employer’s CPF contribution. As this is not the conventional understanding of salary, the article is amended to reflect the more accurate figure of $4,000, which excludes employer’s CPF contribution).
For the rest of the article, we will take the average salary in Singapore to be the median salary of $4,000.
Assumptions For Our Calculations
The following calculations are only meant as a guide and would differ depending on our individual circumstances. Do speak to a trusted agent or home loan broker before committing to a home purchase and loan. Assumptions used in the calculations:
- We do not have any other loans (for the sake of Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio calculations (MSR))
- We do not need to think about other financial commitments, so that our full salary can be committed towards our housing purchase
- We have enough money for the downpayment: 10% for HDB flats
- We are taking a 25-year home loan tenure
- Interest rates for our home loan is 2.6% for HDB flats
- We assume that buyers do not get any government grants for HDB flats.
- For the salary required, we assume that both husband and wife are working and earning the same salary: $4,563.
- We do not take any other costs into consideration, including Stamp Duty, lawyer fees, renovation or other expenses
- The flat prices are taken from the median resale prices in 4Q2020.
While our calculations are for HDB resale flats, do note that a household income of $8,000 ($4,000 x 2) could possibly afford executive condominiums (ECs) and condominiums in the Outside Central Region (OCR). You can find out more in this article about the salaries needed for the various housing types in Singapore.
Additionally, while a household income of $8,000 will qualify for the CPF Enhanced Housing Grant of $10,000, first-time applicants are still eligible for the Family Grant of up to $50,000 while those who live with or near their parents can qualify for the Proximity Housing Grant of up to $30,000.
Flat Sizes We Can Afford On An Average Salary In The Different Estates In Singapore
Using the median salary of $4,000 and the household income of $8,000, we can borrow up to $529,000 according to the calculators on HDB Flat Portal. Including the 10% downpayment, we can afford a house purchase of up to $587,700.
|Ang Mo Kio||$300,000||$405,400||$690,000||*|
|Choa Chu Kang||$335,000||$400,000||$477,500||$554,500|
Median HDB Resale Prices in 4Q2020. Source: HDB.
“-” indicates there were less than 20 transactions recorded in the quarter.
3-Room HDB Resale Flats
In general, with a budget of $587,700, we can more than comfortably afford a 3-room resale HDB flat in Singapore.
With some estate prices falling below the $300,000 mark, singles (with the median salary of $4,000) can also consider this flat size as an option for their first home purchase.
4-Room HDB Resale Flats
The prices for 4-room resale flats range between $370,000 to $792,500, with most estates hovering above the $400,000 mark.
With a budget of $587,700, we can afford the median 4-room flat prices in most estates, except for Bukit Merah, Central, Geylang and Queenstown. The eye-popping prices at these 3 estates are driven by the prime locations and new flats which have just fulfilled their Minimum Occupancy Periods (MOPs).
Singles are out of luck when it comes to purchasing a 4-room flat with a single salary of $4,000 and a housing budget of less than $300,000.
5-Room HDB Resale Flats
The prices for 5-room resale flats range between $422,000 to $917,500, with most estates hovering around the $500,000 mark.
With a budget of $587,700, we start to see our options narrowing. We can afford the median 5-room flat prices in most estates, except for Ang Mo Kio, Bedok, Bishan, Bukit Merah, Clementi, Queenstown, Kallang/ Whampoa and Toa Payoh. These estates have been long known to be highly sought after due to their established amenities and good locations.
Executive HDB Resale Flats
It is harder to generalise for Executive HDB resale flats due to their relative scarcity. Many estates don’t have sufficient transactions for median price data to be published. However, as a rule of thumb, you can expect these flats to be priced higher than their 5-room equivalents due to their larger floor area.
With a budget of $587,700, we will be priced out of Bishan, Bukit Batok, Hougang, Jurong East, Pasir Ris, Serangoon, Tampines, Woodlands and Yishun. However, we are also likely to be priced out of the estates which were excluded due to insufficient resale transaction data: Ang Mo Kio, Bedok, Bukit Timah, Bukit Merah, Central, Clementi, Geylang, Kallang/ Whampoa, Queenstown, Toa Payoh, and Marine Parade.
Families who prioritise the added floor area of Executive HDB resale flats can consider Choa Chu Kang, Jurong West, Sembawang and Sengkang.
Not Everyone Is Average
If we are earning an average salary of $4,000 or above, we can count ourselves as fortunate. We are able to afford housing in all the estates in Singapore and we have plenty of options in terms of flat sizes. Some of us may even want to consider executive condominiums and condominiums as viable housing options.
However, average doesn’t mean that everyone is earning that salary amount. In fact, median salary means that 50% will earn less than that. In these cases, housing options will be more limited, though they will receive additional housing grant support.
However, the same applies to flat prices. The prices mentioned above are median prices and the price for individual flat units can differ depending on a variety of factors including the property condition and age.
In the end, your housing purchase has to be suitable for your individual housing needs and budget and some compromises may need to be made. Avoid overleveraging yourself and do speak to a trusted agent or home loan broker before committing to a home purchase and loan
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