[Contributed by Zen] Recently, CNA published a commentary that talks about how the HDB is still affordable for the average Singaporean. The author argues that million-dollar flats are “just 1.4 per cent of the total resale volume that month”, and that the median resale/BTO prices ($510k and $436k respectively) are affordable. I beg to differ.
The median prices are not affordable for the average Singaporeans
First, let’s keep in mind that the median wage (including CPF contributions) of full-time employed residents is $4,680 in 2021.
The author notes that in 2021, the price-to-income ratio is 4.07 in the BTO market and 4.23 in the resale HDB market. This means that home-buyers would currently need to accumulate about four years of income to buy a new 4- or 5-room flat. This means that if you earn less than $4,680 a month, you will need to take a even longer time to save up for a flat.
What is the likelihood that an average Singaporean who wants to buy a flat earns less than $4,680 a month?
The median wage does not differentiate between new or older employees. In the same role, a newer employee will naturally earn less than an employee who has been in the role for 10 years.
It also does not differentiate between graduates and non-graduates. Graduates generally earn more than non-graduates. In 2020, Straits Times reported that 33% of Singaporeans are graduates. The median salary of graduates for local universities is $3,800 in 2021.
So it is very likely that an average Singaporean earns less than $4,680 a month, especially if you are just starting out.
The HDB’s idea of affordability does not take into account home circumstances.
It also does not take into account if you are using a private bank loan, legal fees, home insurance premiums, renovation and furnishing costs, maintenance fees, property taxes.
Basically, they believe that you can buy a BTO flat in about 4 years if you earn $4,680 a month. But this is calculated without consideration for those who are their family’s sole breadwinner. They forget that it only works out if you don’t have dependents to take care of.
So many things are not being considered, how can they conclude with such certainty that the HDB is affordable?
Even I myself have not covered all grounds with what I’ve written above. For example, what is the typical background of Singaporeans who need to purchase a home? Are they young? Are they from better off families?
The crux is, the government is used to making conclusions from numbers, and they fail to even analyze numbers accurately. When numbers only affirm your views, you should start to reevaluate the way you are processing these numbers.