Once the domain of condominiums and landed property, the $1 million price tag has started to enter the HDB market on a more regular basis. While in previous years, HDB flats that command the $1 million price tag or more would warrant an individual news article, these days we see a round-up of the number of flats that sold for over $1 million. In the first half of 2021 alone, 106 HDB flats sold for more than $1 million.
With resale flat prices rising every quarter, it may not be farfetched to think that one day we will be considering buying a $1 million HDB flat. So, here’s how much we need to earn to buy and stay in a $1 million HDB flat.
Where Are These $1 Million HDB Flats?
The typical profile of a $1 million HDB flat tends to be flats located in mature, sought-after estates such as Queenstown, Bukit Merah and Bishan. While they tend to be 5-room flats or larger, 4-room flats in Central area (e.g. [email protected]) or flats that are just out of Minimum Occupation Period (MOP) in central areas can also command a $1 million price tag. Thus far, there hasn’t been a 3-room flat that has sold for over $1 million, with the possible exception of terraced HDB flats which may have a 3-room configuration.
How Much Do You Need To Earn To Buy An $1 Million HDB Flat?
Using the same assumptions we made when calculating how much we need to earn to buy a resale flat:
- We do not have any other loans (for the sake of Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR)calculations
- 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 HDB home loan tenure
- Interest rates for our home loan are 2.6% for HDB flats
- We meet the eligibility criteria for the maximum government grants for our income and both spouses are Singapore Citizens.
- 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
We would require a household income of around $13,000 and above or about $6,500 per spouse to afford a flat that costs above $1 million.
|Resale Flat||Average Housing Price||Family Grant||Price After Grants||Minimum Downpayment||Outstanding Payment||Monthly Repayment||Household Income||Salary Per Spouse|
|4-Room and smaller||1,000,000||50,000||950,000||95,000||855,000||3,880||12,930||6,460|
|5-Room or larger||1,000,000||40,000||960,000||96,000||864,000||3,920||13,070||6,530|
|All flat types with no grants||1,000,000||–||1,000,000||100,000||900,000||4,080||13,610||6,810|
We Are Still Eligible For Housing Grants When We Buy A $1 Million Resale Flat
While most of us would think that any buyer of $1 million HDB flats would not be receiving any help from the government, the truth is that there are still grants that are without income restrictions.
The Family Grant is available to any first-timer who is buying a resale HDB flat or EC. The grant has an income cap of $14,000. The grant amount is subject to flat size and nationality.
|2-room to 4-room resale flat||5-room or bigger resale flat, Executive Condominium|
Additionally, if our resale flat is within 4 km of our parents, or we are planning to live with our parents, we would be eligible for the Proximity Housing Grant (PHG). The grant amount is $20,000 if we live within 4km of where our parents are staying or $30,000 if we stay with our parents/child. This grant can still apply even if we are second-timer HDB buyers, as long as we haven’t applied for the PHG before.
How Much Does It Cost To Stay In An $1 Million HDB Flat?
Unlikely staying in a condominium with monthly maintenance fees of about $300 or more, the cost of staying in a HDB flat, even if it costs more than $1 million, still stays affordable. Of course, we won’t have the private pools of a condominium but we can still choose to live near one of the many public pools and sports centre with a budget of $1 million for our HDB flat purchase.
HDB residents enjoy the services of their respective town councils and pay an affordable rate of $60 to $100 (for 4-room and larger flats) for our monthly Service & Conservancy Charges (S&CC). HDB residents also enjoy the S&CC rebates that the government has handled out as part of the Singapore Budgets.
Additionally, Budget handouts like the GST Voucher U-Save are applicable only to HDB residents. The utilities offset for GST Voucher U-Save in FY2021 amounts to $355 to $475 for 4-room and larger flats.
Recent applicants for the various COVID-19 support measures including COVID-19 Recovery Grant would also be much relieved to find out that all HDB properties would fall below the Annual Value cut off of $21,000.
$1 Million HDB Flats Are Here To Stay
Whether an $1 million HDB flat is worth the investment is up to the buyer and what the buyer values. Do keep in mind that HDB flats are a depreciating asset due to lease decay; they have to be returned to HDB at the end of their 99-year lease. That said, $1 million flats are likely to be a continuing property trend. While the 2013 property cooling measures did curb the then red-hot HDB resale market, there were still HDB flats that sold above $1 million, albeit much fewer in numbers.
As HDB resale prices continue to rise in face of increased demand from home buyers, we can expect more HDB flats to transact above $1 million. As median wages increase over the years and more Singaporeans find value in living in HDB flats, inflation will naturally increase the prices of HDB flats and more flats will sell above $1 million.
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