How much do you need to earn to buy an HDB resale flat?
PHOTO: 99.co
PUBLISHED ONJune 19, 2023 6:06 AMByVirginia Tanggono
If the BTO wait is too long and getting a condo is too expensive, your best bet is to go for an HDB resale flat. Not only are there lots of resale options spread across the island, but they also tend to come with a bigger floor area.
And the best part about getting a resale flat? If there’s not much renovation to be done, you can move into your new home within three months!
But as with any other property purchase, you need to work out your finances. And with resale prices increasing over the past year, it’s even more important to ensure that you’re buying one within your means.
Previously, we’ve done an article on how much you need to earn to afford a condo .
So this time, we crunch the numbers to estimate the monthly income to afford a resale flat in the various estates.
How the estimated monthly instalment and income are calculated
For illustration purposes, we’re using the average resale prices from our Researcher tool, derived from sales transactions in the first half of 2023 in the various HDB towns.
The estimates will be based on the following assumptions:
- You’re taking HDB loan (maximising the 90 per cent loan-to-value ratio, so the downpayment will be 10 per cent)
- The loan tenure is the maximum 25 years, with the current interest rate of 2.6 per cent
- You’re not paying any other housing loans
Based on the average prices, we calculate the estimated monthly instalment using a mortgage calculator.
When taking a home loan, there’s a limit to how much you can take relative to your income. In the case of public housing, the monthly instalment shouldn’t exceed the 30 per cent mortgage servicing ratio (MSR), which restricts the property loan amount you can take for an HDB flat (new or resale) or a new EC.
So based on the estimated monthly instalment, we calculate the minimum monthly income you need to have to buy a resale flat in the various HDB estates. We’re not taking into account any CPF grants in the calculations.
The estimated minimum income to buy a resale flat in 2023 in the various HDB towns
|
HDB town |
Average price of a 4-room flat |
Loan amount (80%) |
Downpayment (20%) |
Estimated monthly instalment (with 2.6% interest rate) |
Estimated monthly household income (with 3% stress-test) |
|
$643,000 |
$514,400 |
$128,600 |
$2,334 |
$8,131 |
|
|
$563,000 |
$450,400 |
$112,600 |
$2,043 |
$7,120 |
|
|
$688,000 |
$550,400 |
$137,600 |
$2,497 |
$8,700 |
|
|
$587,000 |
$469,600 |
$117,400 |
$2,130 |
$7,423 |
|
|
$787,000 |
$629,600 |
$157,400 |
$2,856 |
$9,952 |
|
|
$510,000 |
$408,000 |
$102,000 |
$1,851 |
$6,449 |
|
|
$794,000^ |
$635,200 |
$158,800 |
$2,882 |
$10,041 |
|
|
$886,000 |
$708,800 |
$177,200 |
$3,216 |
$11,204 |
|
|
$496,000 |
$396,800 |
$99,200 |
$1,800 |
$6,272 |
|
|
$659,000 |
$527,200 |
$131,800 |
$2,392 |
$8,333 |
|
|
$620,000 |
$496,000 |
$124,000 |
$2,250 |
$7,840 |
|
|
$532,000 |
$425,600 |
$106,400 |
$1,931 |
$6,727 |
|
|
$484,000 |
$387,200 |
$96,800 |
$1,757 |
$6,121 |
|
|
$488,000 |
$390,400 |
$97,600 |
$1,771 |
$6,171 |
|
|
$735,000 |
$588,000 |
$147,000 |
$2,668 |
$9,295 |
|
|
$572,000^ |
$457,600 |
$114,400 |
$2,076 |
$7,233 |
|
|
$551,000 |
$440,800 |
$110,200 |
$2,000 |
$6,968 |
|
|
$586,000 |
$468,800 |
$117,200 |
$2,127 |
$7,410 |
|
|
$839,000 |
$671,200 |
$167,800 |
$3,045 |
$10,610 |
|
|
$538,000 |
$430,400 |
$107,600 |
$1,953 |
$6,803 |
|
|
$564,000 |
$451,200 |
$112,800 |
$2,047 |
$7,132 |
|
|
$591,000 |
$472,800 |
$118,200 |
$2,145 |
$7,474 |
|
|
$566,000 |
$452,800 |
$113,200 |
$2,054 |
$7,157 |
|
|
$725,000 |
$580,000 |
$145,000 |
$2,631 |
$9,168 |
|
|
$488,000 |
$390,400 |
$97,600 |
$1,771 |
$6,171 |
|
|
$489,000 |
$391,200 |
$97,800 |
$1,775 |
$6,184 |
There were less than 20 transactions for the flat type in Bukit Timah and Marine Parade.
*Do note that these estimates are based on the average price (rounded off to 3 significant figures), which may be higher or lower than the actual price. We recommend you to calculate based on the actual price to determine if it’s within your means.
Where are the most affordable HDB resale flats at?
Based on the average prices of 4-room HDB resale flats over the first six months of 2023 (up to June 11), the most affordable resale flats are generally in Jurong East, Jurong West, Woodlands, Yishun and Choa Chu Kang.
The estimated income range to buy a 4-room HDB resale flat in either one of these estates is around $6,100 to $6,300.
As you can see from the table above, cheaper flats tend to be located in non-mature estates where the towns are newer and further away from the city centre.
But don’t discount mature estates just yet. You can also find some cheaper flats in mature estates, including Pasir Ris, Bedok, Tampines, Marine Parade and Serangoon, where the average prices of 4-room flats are on the lower end of the spectrum. The downside is that they’re probably older flats.
Where are the most expensive HDB resale flats at?
The most expensive flats are generally in the centrally located estates, such as Central Area, Queenstown, Bukit Timah and Bukit Merah. These are also where you can find million-dollar flats and rare types of flats such as HDB maisonettes.
With the average prices ranging between $790,000 and $890,000, you’ll need to earn a monthly household income of around $10,000 to $11,200 to afford a flat in one of these estates.
Whichever location and property type you’re buying, you should ensure that it’s within your means. In the case of HDB resale flats, whether you’re taking an HDB loan or a bank loan, you’ll have to meet the MSR requirement so that you’re not overleveraged.
But don’t just count on the MSR. Take into account your CPF and cash savings as well. On top of that, you should have at least six months of savings to cover your monthly instalments, in case of a loss of income.
ALSO READ: 1 in 3 HDB resale flats now includes COV - here's what you need to know