What about HDB?
Let us now consider the cost of HDB from a cost-salary historical perspective. I draw the following information from Lianhe Zaobao, 6/9/09 , written by financial columnist Xu Li Qing.
In 1970s, a 3 room HDB flat costs $8,000. A fresh graduate then earns $1,000 monthly. It is about 8 times his salary. Of course it was extremely rare to have a graduate then!
In 1980s, a 3 room HDB flat in Ang Mo Kio costs $40,000. A fresh graduate then earns $1,600, which translates to 25 times his salary.
Currently, a 3 room HDB flat in Ang Mo Kio costs $270,000. Compared to a fresh graduate’s salary of $2,700, it is 100 times his salary!
HDB prices have increased 12.4% (compounded) annually and our salary has only increased 3.4% (compounded) annually.
In simple words, HDB prices have since increased 30 times, compared to 2.7 times our salary since 1970.
And HDB has always maintained that prices are reasonable and affordable. I supposed it is, for the higher income families!
This explains why dual income is the dominant income model for most families. It makes houses 50% more affordable!
It is not exactly a wonderful feeling to know that my entire portfolio of stocks is barely enough for a 4 room HDB flat or a 20% down payment for a 2 room apartment.
When can I afford to buy my own house?
4 comments:
Property in Singapore is just too exorbitant. I totally agree with your post....
Let's hope MBT's moves will cool the market a little, including the HDB resale market.
Cheers,
Musicwhiz
I would think HDB's classification of affordable is when you are able to service your home using < 35% from your monthly income(CPF included for 20 or 30yrs. It's not correct but it's the way it is done by the govt and accepted by the people.
But I agreed that it does not make sense when suburban condos are selling for a million dollar or more nowadays. This is already a bubble in my opinion. Only in Singapore where a millionaire does not feel like a millionaire. Uniquely Singapore! :P
then what do you think the main reason is for the tremendous and incridible uprising of the prices of even flats only in Singapore? Specualtions or?
Hi,
I would think that it depends on why you are buying it for.
However, I would say it's not wise to buy at the moment, be it for investments or for stay, unless absolutely necessary. There are still a lot of people out there flushed with cash from en bloc sale looking to buy.
Another thing... property speculators. There are many who bought and flipped a few times a year to earn near $200k per flip. My aunt's ex-hubby did that, and that got him filthy rich.
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