Affording a $500k house in Singapore can be very taxing on the families here. As mentioned in the previous post, we have a lot of other expenses to consider before purchasing a home. However, those expenses do not include any daily living expenditure. Hence, today we will do a rough calculation of exactly how much a Singaporean will need to make to afford a $500k house and a $1,000,000 condo in today’s market comfortably.
In today’s market, for a $500,000 property, a typical Singaporean family needs to earn a household income of about $7,928. Each spouse needs to generate approximately $4,000 in income per month. This will help to supplement the monthly housing installment of about $1,982 and yet there is a surplus to spend on other expenditures.
Below are some of the criterias that we set in place:
- Loan Tenure 30 Years
- Upfront payment: 10% HDB, 25% Private Properties
- Interest rates: 2.6% HDB, 2% Private Properties
- Husband and Wife have the same income
- Other Expenses not included yet, like stamp duties, etc
|Type of property||Property Price||Down Payment||Monthly Instalment||Income Per Spouse|
|3 Rm HDB||$290,000||$29,000||$1,045||$2,090|
|4 Rm HDB||$450,000||$45,000||$1,621||$3,242|
|5 Rm HDB||$550,000||$55,000||$1,982||$3,964|
Some of the data above we extracted it from HDB, URA, and PropertyGuru. This helps us to derive the average prices. However, it does not reflect any true or accurate results and it is just for study purposes. For HDB prices, it does not include any grants at all.
Additional costs beside purchase price
Above will be the raw purchasing price of a house. There are other costs and factors that we need to factor in. Stamp duties, management fees, legal fees, valuation fees, fire insurance, property taxes, etc.
However, we will tabulate all that in the table below and give you a more detailed figure of how much you need to set aside to service your house comfortably, setting a safety net for your family in times of crisis, COVID-19.
|Type of property||Property Prices||Down Payment||Stamp Duties and Legal Fee ($2200)||Monthly Instalment||Monthly Expense||Income Per Spouse|
|3 Rm HDB||$290,000||$29,000||$4,000 / $6,200||$1,045||$528||$2,090|
|4 Rm HDB||$450,000||$45,000||$8,100 / $10,300||$1,621||$628||$3,242|
|5 Rm HDB||$550,000||$55,000||$11,100 / $13,300||$1,982||$828||$3,964|
|Condo (OCR)||$1,250,000||$312,500||$34,600 / $36,800||$3,465||$1030||$4,950|
|Condo (RCR)||$1,650,000||$412,500||$50,600 / $52,800||$4,574||$1500||$6,534|
|Condo (CCR)||$3,200,000||$800,000||$112,600 / $114,800||$8,871||$2128||$12,672|
|Terrace||$2,800,000||$700,000||$96,600 / $98,800||$7,762||$1528||$11,088|
|Semi-Detached||$4,300,000||$1,075,000||$156,600 / $158,800||$11,920||$1528||$17,028|
|Bungalow||$10,800,000||$2,700,000||$416,600 / $418,800||$$29,939||$3228||$42,770|
Stamp Duties based on 1st Property and for Singapore Citizens
From the above table, there will be some monthly expenses like utilities, daily expenses like groceries shopping, refuse fees, management fees for condos and some repair works for the house. Hence, the figure above is the estimated cost of what most households will experience. It varies from household to household. However, what is more important is that from the above example, there are still savings on a year to year basis as long as you choose the property within your monthly income bracket. Savings are important as it forms a safety net for you during rainy days. Also, it helps to save and pay down the principal on your housing loan and help you achieve more properties in your lifetime. The monthly expenses above do not include one time expenses like holiday trips, parties, and renovation costs.
Knowing how much to set aside for your $500k house
In the end, financial management is very important. Knowing how much to set aside for your property is important. However, needing to know how to grow the money is just as important. This is because you can see that the monthly installment of the housing loan takes up a big chunk of our household income. Hence, we need to hedge against that during our wealth accumulation stage. Only then, Singaporeans will be asset and cash-rich upon retirement.
Conclusion – can I afford a $500k house
To safely afford a $500k house in Singapore, generally, a household income of $8,000 will be a good gauge. Given that the monthly mortgage of the house is around $1,982, there should be some surplus from your income to work with. In the end, it all boils down to working within your means and budget, and generally, you should be safe!