How Much Do You Need To Earn To Buy A Home In Singapore [Condo 2024 Edition]

In my earlier blog post, I explored how much you will need to earn to buy a HDB BTO or resale unit in Singapore and how much you will need to earn to buy an EC in Singapore.

Many clients stopped at their tracks after learning about the math to buy an EC. If an EC is already out of their reach, then we don't need to consider buying a private condo, right?

This could be a fallacy. We have seen several cases where a private condo may be more achievable. Why so? Because of two reasons:

1. Price Quantum of ECs - Many ECs start from 3BR, and thus, their quantum is about $1.12m for Yishun North Gaia or about $1.4m for Bukit Batok/Tengah Lumina Grand and Altura.
   

2. Mortgage Service Ratio - The Government only allows buyers to loan up to a cap of 30% of your household income for HDB BTO, resale and ECs. For private condos, the Government applies a different ratio - Total Debt Servicing Ratio - and allows buyers to loan up to a cap of 55% of your household income.

With a larger loan eligibility and lower price points for smaller condo units, private condos could be possible options for many buyers. Having said that, we would advise buyers to have a personalised consultation with your agent (which can be me, haha) to explore your property options.

But we often hear buyers may be a little shy to meet agents or fearful of possible hard-sell tactics. Thus, I wrote this article—How Much Do You Need To Earn To Buy A Home In Singapore [Condo 2024 Edition]—to shed some light on buying a condo in Singapore. 

And just to nag again, this blog article shouldn't replace the discussion that you should be having with your real estate agent. Do note that it only aims to give you some inkling about how much you need to earn to buy a condo in Singapore. 

First Up, What Is Total Debt Servicing Ratio (TDSR)?

So, TDSR allows Singaporeans to take a larger loan quantum if you are buying private properties. What exactly is TDSR? TDSR is a financial guideline that limits how much salary buyers can use to repay loans. The main purpose of TDSR is to ensure that buyers do not overexert themselves financially when buying private properties.

Illustrated Example of 55% Total Debt Servicing Ratio

A 55% TDSR means that your maximum loan instalment for each month cannot exceed 55% of your household income. For example, if your combined monthly income is $10,000, the maximum monthly instalment allowed for a loan is $5,500.

If the buyers have existing debt obligations, such as a car loan, school loan, etc., this will form part of the 55% TDSR and reduce the loan quantum for your property loan. 

To Know How Much You Need To Earn To Buy A Condo in Singapore, You Need To Know Your Loan Quantum

We can all take a loan up to 65 years of age, and the standard loan tenure for private properties is up to 30 years. You can explore with the bank to take a longer tenure, but this will come with more conditions. If you wish to know more about this, PM me.

Buyers under 35 can safely take the full 30-year loan tenure. Buyers older than 35 will be faced with a shorter loan tenure, and their loan quantum will be reduced accordingly. 

As a simple illustration, the below chart shows the estimated loan quantum MSR and TDRS for the various income tiers based on a 30-yr Loan:

Table 1: Estimated MSR and TDSR Loan Quantum For 30-Year Bank Loan

How to read this chart: For example, a household income of $7,000 will likely secure a bank loan of about $405,000 to buy an EC. This same family can get a loan of $805,000 to buy a condo. 

For those who are older and thus facing a shorter loan tenure, contact a banker to know your estimated loan quantum. You can also contact me, and I can also prepare a similar chart (similar to Table 1) for your reference. 

Looking at Table 1, it is clear that with TDSR, the loan quantum is significantly higher, which is why buyers may have more options for condos. Nonetheless, buyers should always check the required monthly instalment and make sure you are comfortable to finance that monthly sum. It is optional to max out your loan eligibility, and do ensure that you exercise sufficient prudence and have enough financial buffer for rainy days. 

How Do You Calculate Your Home Budget?

The table above is only a guide, and it uses an example of a family below 35 years old to gauge its loan eligibility. To have a more accurate idea, you would need to do an In-Principal Approval (IPA) with a banker. An IPA is a commitment by a bank that they will extend you a home loan up to a specific amount and tenure. If you need any contacts of bankers, just ping me, and I will send some bankers your way. 

Nonetheless, here's the simple formula to calculate your affordability. As mentioned repeatedly, it's best to work your Math with a real estate agent or me. 

A Simplified Formula To Calculate Your Home Budget

Using this formula means that your cash savings + your CPF OA funds + loan quantum must be able to cover the property's selling price and stamp duty.

The stamp duty varies according to the selling price. You can use the IRAS tax calculator to calculate the stamp duty. 

What If We Have An Existing Property To Sell?

The good news for those who have an existing property is that the stress on their income levels would be lower. This is because their existing property stores some of their CPF funds and, hopefully, potential gains, too.

To know your cash proceeds and CPF refunds from your property sale, we need to do another set of calculations. Feel free to message me so I can give you an idea about it. 

And by now, you should have a rough idea of your loan quantum, so let's look at some of the condo prices. 

What Are The Prices Of Condos?

Prices For 1BR New Launches

Artist's Impression Of Lentoria

As of April 2024, the prices of new launches 1BR start from $1.018m for a freehold 517 sqft in a boutique development at Geylang, and the table below summarises some of the lowest quantum options in today's market. 

Name	Tenure	Size	Price
Gems Ville	Freehold	517sqft, 1BR	$1,01X,000 up
Mattar Residences	Freehold	495sqft, 1BR	$1,1XX,000 up
The LakeGarden Residences	99yr	527sqft, 1BR	$1,1XX,000 up
Lentoria	99yr	538sqft, 1BR	$1,2XX,000 up
The Myst	99yr	517sqft, 1BR+S	$1,2XX,000 up
The Arden	99yr	657sqft, 2BR	$1,2XX,000 up
Hillock Green	99yr	517sqft, 1BR	$1,2XX,000 up
Kovan Jewel	Freehold	624sqft, 1BR	$1,3XX,000 up
Lentor Hills Residences	99yr	603sqft, 1BR+S	$1,3XX,000 up
Tembusu Grand	99yr	527sqft, 1BR+S	$1,3XX,000 up
Lentor Modern	99yr	527sqft, 1BR	$1,3XX,000 up
Pinetree Hill	99yr	538sqft, 1BR+S	$1,3XX,000 up
Hill House	999yr	431sqft, 1BR	$1,3XX,000 up
Grand Dunman	99yr	549sqft, 1BR+S	$1,3XX,000 up

Prices For 1BR Resale

Doing a quick search via the PropertyGuru portal:

• For less than $600,000: There are 1BR units of about 350 - 450 sqft, including freehold units at Geylang and leasehold units in Chinatown and Woodlands area.

• For $800,000 and below: There are newer condo units that just collected their keys, e.g. Riverfront Residence, Florence Residence, etc.

• For $900,000 and below: There are also 1BR units in new condos such as Parc Esta, The Tre Ver, or even a leasehold conservation apartment in the D9 district!

The world could be your oyster if you are willing to explore a minimalist approach to your homestay. If you wanna know more about the available resale options that you can consider, I will shortlist some units for you to look at.

Can We Live In A Small Apartment?

Honestly, is it doable to live in a small apartment? I would say yes! It is a lifestyle choice. 

Can We Stay In A Small Apartment?

My first home was a 131 sqm HDB Executive Apartment for two people—my husband and me. My study room was my personal space, and it housed an entire eight-door wardrobe all to myself. 

Soon, the number of people in my household grew from two to seven. Before you gush and congratulate me, nope, we don't have five kids. We do have one princess PLUS my parents, my brother, and my sister-in-law with us. My wardrobe was downsized to a two-door wardrobe. I threw out and donated lots and lots of clothes, books, ornaments, lingerie, bags, purses, perfumes, socks, winter clothes, cosmetic samples, travel souvenirs, etc.

Now, I am much more stringent and selective when shopping, which has saved me tons of money. I used to buy the same top in different colours just because I couldn't decide which colours looked best on me. Now, I go for the safe and versatile tones. 

And I have also seen many clients who have successfully and happily right-sized to small units:

• A family of two adults: From 1400 sqft condo to 600 sqft condo

• A family of three adults: From semi-detached to HDB 4-room

• A family of four adults and children: From 1200 sqft HDB to 900 sqft condo

They tell me that a decluttered lifestyle is actually quite refreshing because it gives you a clearer idea of your needs versus your wants. 

So How Much Do We Need To Earn To Buy A 1BR In Singapore?

Coming back to the key question, since we now have an idea of the possible loan quantum and prices of a 1BR, let's discuss the payment milestones of buying a 1BR across the various price ranges. 

Math for Resale 1BR At About $700K to $1M

Payment Milestones	Type of Payment	$600K Resale 1BR	$900K Resale 1BR
5% Option Fee To Exercise OTP	Cash	$30,000	$45,000
Remaining 20% Downpayment	CPF/Cash	$120,000	$180,000
Stamp Duty	Cash then reimburse CPF	$12,600	$21,600
75% Loan	Loan	$450,000	$675,000
TOTAL		$612,600	$921,600

Based on a price of $600-900K, do make sure that:

• you have cash of $30K - $45K

• your CPF accounts have $132.6K - $201.6K

• your IPA allows for $450K - $675K

So, for a 1BR resale that may cost about $600-900K, you will need to have a combined income of less than $7,000 [use table 1 blue bar to check the loan quantum vs. household income]. This assumes that you have just enough cash and CPF to purchase the 1BR. 

Math for New Launch 1BR At About $1.1M to $1.4M

Payment Miles	Type of Payment	$1.1M New Launch 1BR	$1.4M New Launch 1BR
5% Option Fee To Book Flat	Cash	$55,000	$70,000
Remaining 20% Downpayment*	CPF/Cash	$220,000	$280,000
Stamp Duty	CPF	$28,600	$40,600
75% Loan	Loan	$825,000	$1,050,000
TOTAL

Based on a price of $1.1M - $1.4M, do make sure that:

• you have cash of $55K - $70K

• your CPF accounts have $248.6K - $320.6K

• your IPA allows for $825K - $1.05M

So, for a new 1BR launch that may cost about $1.1M —$1.4M, you will need to have a combined income of about $7,000+ to $9,000+ [use table 1 to check need loan quantum vs household income]. This assumes that you have just enough cash and CPF to purchase the 1BR. 

I wish I could cover more about the prices of resale and new launch condos for 2BR, 3BR, 4BR and up, but that would turn this essay into an Encyclopedia. But for those who are looking for bigger units—2BR, 3BR, 4BR and up—come chat with me so that I can help you with a list of prices for new launch units as well as resale options. 

For Those Who Want A Condo For Primary School Admission:

You will be happy to know that many private properties have good primary school options within 1KM. For example, CHIJ St. Nicholas Girls' School (Primary Section) will be within 1KM of the new launch, Lentoria, while Holy Innocents' Primary School is within 1KM of the resale development, Florence Residence.

For resale properties, it is a simple and direct situation for buyers. You just have to make sure that the school is within the 1KM or 1KM-2KM radius of your preferred school and to study the past enrolment trends for each phase. 

For yet-to-be-completed property, buyers must note that the vacant possession of the property must be within two years of your child's entry into Primary 1.

Let's see two examples to illustrate the timeline planning needed for your child based on a new launch property with an estimated possession date in 2027:

Illustration About Timeline For Primary 1 Registration

The next question people will ask is - will a resale condo make money? Well, I don't have a crystal ball to look into your future. Whether a resale property would make money depends on many external factors. 

There is a guideline on how to pick properties with a higher possibility of appreciation. For example, pick a property within a growth spot, e.g., near upcoming Cross-Island Line MRT interchanges, e.g., Pasir Ris, Hougang, AMK, etc., or shortlist one within close proximity to a growth spot, e.g., Paya Lebar Airbase transformation/Jurong Lake transformation. You can read this blog here to find out more.

For my exclusive clients, the hard work of scrubbing the data and picking good gems is curated by me. Please let me know your budget and needs so I can prepare a list for your eyeballing. 

And here's another freebie: The Huttons NAVIS research team has done a study to look at the growth appreciation trends of condos across varying ages. How was the study done? It takes the average transacted PSF of all the condos in that stage in that year. 

Growth Rates For Leasehold Condos Of Various Age Groups

And what does it show:

• From 2014 to 2023, the average PSF of new launch units sold increased by 6.2% annually.

• In the same period, the average PSF of sub-sale units increased by 2.7% per year

• Similarly, the average PSF of condos aged 1-5 years appreciated 3.2% annually. 

So, if we study the chart, there are still pockets of appreciation gains if you shortlist newer units. The depreciation rate is much slower for units above 20-25 years old.

Now, before you dive deep and jump straight into buying a 30-plus-year-old condo because Pris Low's blog says it has seen the highest growth of over 7%, do bear in mind that these are the trends for the past ten years. There was en-bloc fever in the 2017 period and subsequently during the COVID period. 

In 2017 and 2018, there were more than 60 successful enbloc projects and again, in 2021, we saw 11 en-bloc closings. This has made enbloc properties look very lucrative in this chart. 

Fast forward to the year 2023, when the Government is actively increasing land sales; there were three successful en-blocs in that year, and 17 failed. 

So, en-bloc potential is very much a 'try your luck' game dependent on luck (obviously) PLUS many other factors, such as condo on-site conditions and the overall external macro environment. Based on the current market sentiments, the chance of en-bloc is almost minimal and few. 

So You May Wonder, Can We Really Afford Private Property?

Can We Really Afford A Condo In Singapore?

Well, it depends on your preference and threshold. And if one cardinal rule applies to all things, we cannot have our cake and eat it. If you want new condos, they will be small and costly. It won't come cheap if you want a good size as your forever home.

And talking about forever home, property shouldn't be a forever home concept unless you are way into retirement. Suppose you want to leverage the power and potential of a property - in that case, you should view the property as a progression path. Only then will you be able to use your funds better and see better gains.

Buy a small unit first and sell it as your income grows. Actually, that is what our grandparents and parents did. They bought their 3-room HDB, then slowly upgraded to a 5-room HDB for some private properties.

Don't Get Stuck In The Thinking Of Buying A Forever Home.

So, back to the question—can we really afford a condo? Looking at the resale prices of a 1BR condo that starts at $600,000, we can safely say that a combined income of $4,000+ would be sufficient. If so, resale condos can offer an economically feasible option for buyers. Those with stronger financial means and wish to see a higher possibility of capital gains can look at new launches. 

And with private properties, there is a shorter runway to sell them in future. This is unlike HDB flats that requires buyers to meet the 5-year Minimum Occupation Period. For private properties bought after 11 March 2017, buyers can sell their condo after three years without incurring any Seller's Stamp Duty (SSD). If buyers do choose to sell within the first three years of their purchase, the stamp duty is as follows:

Extracted from IRAS: Seller's Stamp Duty

Is it a rare unicorn occurrence for buyers to sell during the SSD period? Nopers, many do try to hold, but I have seen buyers who sell their condos after two years because the appreciation gains are well above the 4% seller's stamp duty. These buyers hope to be able to enter the market sooner to leverage their rising income and buy bigger units. 

Different Folks, Different Strokes.

Well, there is no right and no wrong when it comes to your property path - whether it is a HDB BTO, HDB resale, condo new launch, condo resale or an EC. The important rules:

• Don't try to time the market. No one knows the highest of the high or the lowest of the low. What is more important is your time in the market. If you are always sitting on the fence, your funds are always in the bank and doing minimal for you.
  

• Make sure your budget is sufficient to hold your property through its ups and downs. There will always be a property market cycle and a property life cycle. With enough buffer, you can ride out a property market cycle. However, when it comes to the product life cycle, it will have its limitations. 
  

• Don't always think of your home as your forever home. We are often creatures of habit, and many of us find it too cumbersome to change jobs, move houses, etc. But some changes, although not welcomed, are beneficial for us.  For someone in her mid-forties, I wish I had started my property journey earlier and also upgraded earlier. Now, it is too late. My loan quantum has significantly dropped, and I am more cautious in my financial planning as I have caregiving responsibilities towards three aged parents and one young child with congenital health conditions.
  

• Always reach a consensus. When it comes to a big decision such as property, there is no such thing as a happy wife, a happy life, or because my husband says so. It needs to be a united front. Things will get tough, and you don't want to blame each other.  Those who bought a HDB resale instead of a condo will hate hearing things like - See, I told you to buy that condo. We could have made $500K already. Those who bought a condo instead of a HDB resale will hate it when they can't buy more bags cos the cupboards are already bursting. Because whichever house you buy, the grass is always greener on the other side. And if it isn't a unanimous decision by both parties, these will trigger quarrels. 

Hope You Like This Series Of Articles!

I hope that you enjoy this series of articles as much as I did when I wrote them. Your learnings would be the greatest motivation for me to keep punching on my keyboard, knowing that my words have helped someone. Even if you aren't planning on any property purchase yet, feel free to message me just to let me know that you have found these articles useful!

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ABOUT THE AUTHOR

Pris Low has nearly 20 years of experience in the non-profit sector - representing consumers in their conflicts with retailers and advocating for the less privileged in our community.

Her social service background has helped her be sensitive and attentive to her client's needs and feelings to prepare them financially and emotionally to welcome their new homes. 

She has thrived because she doesn't tell her clients what to do. She hears their needs and explains the options to them. She respects every choice her clients make because she feels there is no wrong decision as long as it meets their needs and they are aware of the possible pitfalls and prepare for it. 

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Her Clients' Interests Over Hers. Always.