How much should you be earning to afford a house in Singapore?


Singapore is certainly one of the most dynamic cities with a fast-growing economy, while also being the second most expensive city in Asia for anyone to live in. According to the Rental Index provided by NUMBEO, Singapore holds 3rd place in the world for being the highest rental index country in the world as of 2021.


However, with the increasing rental conditions that eventually take up more than half of the salary every month, people are looking out to buy their own properties. Be it you are a 1st timer who is buying a house for yourself or a 2nd-time buyer who is investing in a rental property, you should know whether you have made the best decision of your life.


But, why?


Singapore Real Estate market is seemingly facing an uptrend even during and post COVID situations, while many other countries are severely affected in terms of the property markets.

Recent research conducted by the ‘Knight Frank Global Residential Cities Index’ showed that Singapore has ranked 123rd out of 150 countries that have hit increased residential property prices by 0.7% year-on-year in the third quarter of 2020 across the world.


Now, we have reached the point where we ask ourselves – So, how much should I earn to buy a house in Singapore?


Purchasing a house can be the most expensive affair in Singapore. Unlike the money that comes from business entities, earning a salary can leave a significant dent in the family’s finances when it is not clearly understood and managed. One must consider several factors before deciding to buy a house with the most crucial factor being affordability. The affordability is highly correlated to the monthly salary of an individual, while the savings and CPF amount is flexible, the salary criteria are usually fixed.


Types of properties to in Singapore:

Before diving into the salary one must earn, let us understand the types of properties that one can purchase in Singapore.


Basically, in Singapore, the HDB, be it a resale flat or a BTO, comes with three major types – 3, 4 & 5-Room Flats. However, when you are looking into the Condominium, they have varied flat type systems ranging from Studio, 1, 2 & 3-Bedroom Units extending all the way to 6 bedrooms in a few developments. But when you are deciding on buying landed property, the scenario takes a huge turn where you get to differentiate with the property types as the Terrace, Semi-Detached and Bungalow.


Choosing the desirable area/region:


Apart from the varied differences in the type of properties, one would like to buy, the area in which the particular property is located plays a significant role in deciding on the property value. Almost everyone would love to have a house which is near their workplace so they can come home quickly after a tiring day of work. However, this makes the availability scarce, creating a huge demand and increase in the property value simultaneously.

There are 3 regions in Singapore:

  • Core Central Region (CCR)

  • Rest of Central Region (RCR)

  • Outside Central Region (OCR).


To break this down, let us compare few properties and their values according to their locations.


source: Propnex


As shown in the table above, you can notice the significant price difference of the same property type with just the regional difference. This also changes with the size of the flat which you are buying.


For example: if you are buying a 1-Bedroom condo in Kopar At Newton located in CCR, the estimated size would be 517 sqft with an Average price of $2560 psf. Thus, the value of the property will be approximately $1,323,520.


Hence, if you are someone looking to buy a property in Singapore the very first determining factor should be the choice of region irrespective of the type of property, be it a resale HDB, BTO, Condo, or a Landed property.


Eligibilities and Requirements:


Eligibility is completely different from Affordability. Before buying your property, few noteworthy points are available regarding the eligibility and requirement that one should not miss:


Housing loan availability

In the case of an HDB purchase, the buyers can choose from two types of loan that are available in Singapore:

1. HDB loan – The HDB loan is applicable for a resale HDB or a new BTO purchase. The eligibility conditions that should be met include maximum household income and other ownership of private or commercial properties.


2. Bank loan – There are a wide range of loan packages available in banks, and the packages are based on the type of property, buyer’s income, and more importantly the factors such as MSR and TDSR to ensure that the buyer can repay his loan to the bank. The MSR and TDSR is a way the Government of Singapore keeps check to maintain the balance over the borrowing citizens.

However, there is a significant difference between the HDB loan and Bank loan in the Interest Rates, Loan-to-Value Ratio, and the Down Payment methods. They are:


Source: HDB,


MSR (Mortgage Service Ratio)

MSR refers to the amount or percentage that is taken from the property buyer’s gross monthly income for repaying the housing loans that they have applied for and is capped at 30% of their income. This is extensively applicable only for the purchase made for an HDB or an Executive Condominium that has been directly purchased from the developer.


Usually, the financial institutions calculate MSR using this formula:


TDSR (Total Debt Servicing Ratio)

The TDSR is applicable for buyers who purchase private properties such as Condominiums and Landed Properties. The maximum threshold is less than or equal to 60% of their gross family income, which is paid towards their housing loans, and it also includes all the other loans that the buyer has such as car loans, student loans, and personal loans.


The financial institutions calculate TDSR using this formula:


The Salary that a buyer needs to afford a property:

As people progress in their life and career, they have a higher earning power which eventually leads to buying a new property, upgrading their old property, or investing in a 2nd or 3rd property. However, this comes with a hefty price tag, and one must be wary of their financial sustainability. Thus, one should calculate the actual numbers to determine the minimum salary that he/she should be earning to afford a public or private property.

Let us work on the public property types that are taken from the OCR regions to provide a minimal range instead of a median range that is done usually, with the numbers to identify the minimum salary requirement of a family considering the income of both spouses. Also, the loan tenure is taken as 20 years for reference.


Source: HDB; PropertyGuru; Money sense mortgage calculator


In the table above, using the property types such as HDB and Executive Condominium, property value, and down payment, the monthly mortgage rate is calculated. Finally, the amount of monthly gross income a family should have which includes the salary of both spouses is presented in the last column.


For example: If Anthony & Fiona earns together a monthly salary of $3500, they can readily afford a 3 room HDB and they also have an option to choose either an HDB loan or go for a normal bank loan as per their requirements. However, they cannot afford a property more than the 3 room as their gross family income does not match the loan eligibility.


Likewise, the calculations are made for the private listing properties as well, in the table below:


*Assuming 2% Interest Rate, 25-Years Loan Tenure, 75% Loan-To-Value Ratio.


The private properties consist of Condominiums, Terraces, Semi-Detached, and Bungalows. Private properties are more on the higher end of the value and the minimum gross income required for buying even a 1-Bedroom Condo starts from $5,050.


For example: If Mr & Mrs. Lim, aged 45 and 40 respectively, receives a salary of around $14,000 together i.e., gross family income, they are certainly eligible for buying a Terrace house which is valued at a minimum of $2.2m with a 25-Years Loan Tenure. They must pay a down payment of around $550,000 and the monthly mortgage starts at around $6,994.


To conclude

While buying a property, be it public or private housing, one must be aware of the various factors and extra money that goes into different stages of the purchase. The factors include buyer’s stamp duty, legal fee, valuation fee, and renovation costs if needed. Also, just having enough salary cannot make you are eligible for buying a property. You must have a certain amount saved or accumulated in the CPF to pay the down payment and save yourself from unforeseen situations.

Buying a property can be a dream for many, that too, in a fast-growing city like Singapore with property markets skyrocketing every year. The above information might be hard to process, but the more you read, the more you are moving towards making an informed decision. You can now easily break down and analyze the overall cost and affordability ratio without ruining your comfortable life.

Published on: 12/11/21

Published by: Jason Lee

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