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Here’s The The Salary You Need To Earn To Afford These Homes In Singapore [2021 Edition]

Thinking about buying a property? Here’s the salary you need to earn to afford it


Buying a home in Singapore is expensive. In fact, according to CBRE’s Global Living Report, Singapore is the 3rd most expensive residential property market in the world.

For many people in Singapore, buying our home will be the most expensive and biggest financial endeavour in our lives. Not only that, when we buy our home here, we also have to tie ourselves down to a home loan that may span two to three decades.

Making a wrong decision or failing to put in the necessary effort to plan can result in an extremely costly mistake for us.

We decided to calculate just how expensive it is to buy our first home, or to upgrade to a nicer home, and how much of a salary we need to make the purchase. Before diving into the figures, here are some assumptions that we have to make.

Getting The Assumptions For Our Calculations Out Of The Way:

No compilation will be without its shortcomings, so we should do our own number crunching and perhaps speak to a trusted real estate agent and/or home loan broker when ultimately making our home purchase. Other assumptions:

  • 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. For example, it may not make sense to purchase a Good Class Bungalow (GCB) if each spouse only earns about $1 million a year. Nevertheless, the salary levels calculated below is just based on whether we will have the money and will be allowed to make the purchase.
  • We have enough money for the downpayment: 10% for HDB flats and 25% for Executive Condominiums (ECs) and private properties
  • We are taking a 25-year home loan tenure
  • Interest rates for our home loan is 2.6% for HDB flats; and 1.2% for private properties
  • We assume home buyers do not receive government grants or are able to pay a downpayment beyond the minimum requirements
  • For the salary required, we assume that both husband and wife are working and earning the same salary
  • We do not take any other costs into consideration, including Stamp Duty, lawyer fees, renovation or other expenses

Read Also: How Much Buyer’s Stamp Duty And ABSD Singaporeans, PRs And Foreigners Need To Pay – And When

The Salary We Need To Afford Buying Our Dream Home

Housing Type Average Housing Price Minimum Downpayment Monthly Repayments Average Salary Per Spouse
HDB 3-Room $317,000 $31,700 $1,569 $2,615
HDB 4-Room $479,000 $47,900 $2,371 $3,952
HDB 5-Room $584,000 $58,400 $2,891 $4,818
HDB Executive Homes $647,000 $64,700 $3,203 $5,338
Executive Condominiums (ECs) $1,000,000 $250,000 $3,250 $2,708
Condominiums (OCR) $1,200,000 $300,000 $3,900 $3,250
Condominiums (RCR) $1,600,000 $400,000 $5,200 $4,333
Condominiums (CCR) $3,000,000 $750,000 $9,750 $8,125
Terrace House $2,300,000 $575,000 $7,475 $6,229
Semi Detached House $3,000,000 $750,000 $9,750 $8,125
Bungalow $3,100,000 $775,000 $10,075 $8,396
Good Class Bungalow (GCB) $33,000,000 $8,250,000 $107,250 $89,375

Source for prices:  HDB; URA; JLL

Prices for HDB flats were taken from 4Q 2020 resale prices on the HDB website. Compared to our article in 2020, prices seemed to have edged upwards. Prices that we have used do not take into consideration any grant monies from the government.

Read Also: Complete Guide To Housing Grants In Singapore For Different Types Of Flats

Prices of Executive Condominiums (ECs) have similarly seemed to edge upwards compared to 2019 numbers. We crunched the average prices of EC from the URA website. We also got the transacted prices of condominiums from the URA website. Condominium prices are just on an average basis, and the price of individual units may vary greatly.

Prices for Semi Detached Houses and Bungalows seemed slightly on the lower side in 2020, when compared to our article last year – using 2019 figures. This is possibly due to a lower number of transactions and transaction of lower-priced homes rather than a drop in prices of such homes.

The cost of Good Class Bungalows (GCBs) is also really just “for show”. Figures from real estate firm JLL puts the transaction value of an average GCB in 2020 at approximately $33 million. However, prices can range from above $6 million to over $93 million. So read this segment, which is not applicable to majority of people anyway, with more than a pinch of salt.

Do Not Overleverage Yourself Either

Certain results may not make as much sense when just viewed alone. For example, those who want to buy an executive home (either an executive apartment or executive maisonette) must earn close to twice as much as a couple who wants to buy an EC and as much as those who want to buy an HDB 3-room flat.

Read Also: 5 Types Of HDB Flats That Are No Longer Being Built

This is simply because the couple who wants to buy the executive home must ensure their home loan is within the Mortgage Servicing Ration (MSR). The MSR requires that monthly property loan repayments do not exceed 30% of our salaries.

On the other hand, if we want to purchase an EC, we must ensure we are within the Total Debt Servicing Ratio (TDSR) range. The TDSR requires us to fork out no more than 60% of our entire salary on any type of loans. Of course, if we have a car loan or student loan, we cannot take up the full TDSR allowance. At the same time, we have to fork out a higher downpayment for the EC compared to the HDB flat – which leads to having to make higher monthly repayments for HDB buyers compared to private property buyers.

A lower interest rate environment also helps prospective private property buyers to be able to afford a more expensive home for the time being as our monthly repayments will be slightly lower. Comparatively, the HDB home loan rate remains at 2.6% per annum.

Read Also: 5 Reasons You Should Still Choose An HDB Home Loan Over A Bank Home Loan (Even Though HDB Interest Rates Are Higher)

Another assumption our calculations make is that we will leverage ourselves to the maximum possible level. This may not be prudent nor safe in determining whether we can afford to purchase a certain property.

Being overleveraged can cause us stress each and every month, having to fork out the required payments. On top of that, if we become affected by an unforeseen scenario – such as COVID-19 – and are unable to repay our loans, we risk losing the roof over our heads.

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