You’re all ready to buy your first house but realise that your income exceeds the HDB BTO income ceiling. So what other choices do you have?
Should you: 1) Try to find a condo unit at a more affordable price point? 2) Search for HDB resale flats? 3) Or maybe instead of a condominium, go for an Executive Condominium (EC)?
Check out how much you can realistically budget for your new home with our Affordability Calculator.
Here’s a Classic ‘Sandwich Class’ Case Study
Let’s say we have a Mr and Mrs Tan in their early 30s who are about to get married. They’re both earning a comfortable sum of $7,500 a month, which puts their combined monthly household income at $15,000. Based on their combined income, the Tans may have set a budget of $700,000 for their future home.
However, this puts them in a difficult position. Each of their salaries is over the BTO salary cap. Their combined household income is also above the HDB income ceiling. However, they are still below the EC income ceiling.
The Tans now have a dilemma. They are not quite wealthy enough to splash out millions on a condo or landed property, but are not eligible to buy HDB flats directly from HDB (e.g. new flats from upcoming BTO and Sale of Balance Flats (SBF) exercises) as their salary is just above the BTO salary cap, and combined household income slightly over the HDB income ceiling.
With HDB resale flat prices still high due to some supply tightness and the high interest rate environment (i.e. this impacts bank loans, which are the only loans private property buyers can use to find their homes), the question remains: which property purchase now is more bang for your buck? If you’re in the same boat as the Tans, this guide will compare the pros and cons of each option to help you decide which type of housing to go for given your ‘sandwich class’ earning power.
Before you begin the search for your new home, getting a pre-approved home loan could hasten the process.
What Is the Current BTO Income Ceiling?
| BTO HDB flat type | Income ceiling |
| 4-room flat or bigger | $14,000; or $21,000 if purchasing with extended or multi-generation family |
| 3-room flat | $7,000 or $14,000 depending on the project |
| 2-room Flexi flat | $7,000 for 99-year leases; or $14,000 for short leases (15 to 45 years in five-year increments) |
As BTO flats are considered subsidised housing, a BTO income ceiling exists. The BTO income ceiling sets a $14,000 limit on your total monthly household income (also a BTO salary cap), which includes all those whom you’ve listed in your flat application.
Most Singaporeans need not worry about exceeding the HDB income ceiling: for young couples just starting their careers, chances are, their combined salary doesn’t exceed $14,000.
According to the Ministry of Manpower (MOM), the median gross monthly income of full-time employed residents was only $5,197 in 2023. For a couple like that, their combined income would not be more than $10,500, making them eligible for most BTO flat types as they are below the HDB BTO income ceiling.
But what if you’re like the Tans in the sandwiched class, earning an above-average wage but not wealthy enough to buy a $2 million condo? Or maybe you have just given up on balloting for the upcoming BTO launches due to them being heavily subscribed. By the way, the recent June BTO launch saw an average of 3.1 applicants vying for each unit – the highest since May 2023, where the application rate was 3.8.
Let’s explore your options if you exceed the BTO income ceiling in 2024.
Buying an HDB Resale Flat
High-income earners who may not be eligible to buy a new BTO will be pleased to know that there’s no income ceiling for HDB resale flats. However there is a HDB income ceiling to determine eligibility for housing grants.
Pros of Buying an HDB Resale Flat
- Can choose an HDB resale flat in your location of choice
- Some CPF Housing Grants are available (HDB income ceiling applies)
- Able to move in immediately soon after buying
- More affordable than condominiums and ECs, potentially a larger space (older flats)
With a $700,000 budget, the Tans have a variety of options for a ‘premium’ HDB resale flat in many popular locations and mature estates. Resale flat buyers also get to choose from larger types of flats such as executive maisonettes, executive apartments, jumbo flats, and Design, Build and Sell Scheme (DBSS) flats.
Your income partially determines your ability to get certain HDB Housing Grants. Still, it’s worth mentioning that the income threshold for most CPF housing grants is identical to that of BTO units.
In the case of the Tans, their combined income of $15,000 means they are only possibly eligible for the Proximity Housing Grant (PHG). They may also be eligible for the CPF Housing Grant for Resale Flats (Families) of up to $80,000 for first-timers if purchasing it with their extended or multi-generation family.
Quick recap: In Budget 2023, an increase in CPF Housing Grant for first-timer families with children and young married couples aged 40 years and below was announced: eligible applicants can now receive up to $190,000.
Although the grants for HDB resale flats are significantly less than that for BTOs, it is still better than if the Tans were to choose private property – there is no such “discount” for that.
Finally, the best part about getting a resale HDB flat is that you don’t have to wait years for your home to be built and can move in within months. This is an important factor to consider, especially with ongoing BTO construction delays and longer completion times.
Cons of Buying an HDB Resale Flat
- Not brand new
- Potentially higher renovation costs
- Dwindling lease
- HDB resale flat prices are currently high
Firstly, HDB resale flats are “preloved” properties, meaning previous owners have lived in them. Some property seekers may mind this and prefer a brand new home instead.
On one hand, an older property is more likely to show wear and tear, so renovating a resale HDB flat may incur higher costs than buying a new property (i.e. you may need to rewire the electricity or do a lot of hacking). On the flip side, if you’re not fussy about the design, an HDB resale flat (especially the newly MOP-ed ones) may well be move-in ready with all the furniture and fittings you need.
Of course, the dwindling lease is one of the most talked-about disadvantages of getting a resale flat. If you buy a relatively new resale flat – one that has recently fulfilled its Minimum Occupation Period (MOP) – then there is not much of an issue. However, if you’re eyeing older ones and intend to sell them in future, then the decaying lease may be a concern.
In 2024, it’s predicted that the high-price, low-demand scenario will continue. According to the PropertyGuru Singapore Property Market Report Q1 2024, the HDB resale market saw a more pronounced 6.4% decrease in HDB resale listings compared to 2.5% decrease in interest in HDB resale flats.
Buying an Executive Condominium (EC)
ECs are developed and sold by private developers but subsidised by HDB. Because they’re subsidised, they also come with a $16,000 EC income ceiling (this is slightly higher than the HDB BTO income ceiling) and remain a popular option for many for having all the typical condo facilities such as a pool and gym.
Note: For this analysis, we are considering new ECs (i.e. bought from the developer). Resale ECs are priced similarly to private condos (especially those that have passed their 10-year mark and become privatised), which we will discuss in the next section.
Pros of Buying a New EC
- Look and feel of private property
- More affordable than private condos
- Good value and potential appreciation
If you want to live in a private property, then ECs may be your best bet. ECs were specifically designed for the “sandwich class” like Mr and Mrs Tan: middle-income Singaporeans who don’t qualify for an HDB BTO flat due to exceeding the HDB BTO income ceiling but still find private condominiums out of their reach.
ECs are cheaper and would be within the Tans’ budget – compared to private condos, they are 10% to 15% cheaper. Since ECs are designed for own-stay purposes (as opposed to condos with shoebox units to cater to investors), ECs are usually bigger and start from three-bedroom units.
Many people also view ECs as a smart investment since they can sell for prices fairly comparable to private condos once they reach the five- and 10-year marks. This implies a sizable profit for individuals who first purchased the ECs at a subsidised price.
Although EC buyers may be able to apply for a CPF Housing Grant, there is an executive condo (EC) income ceiling of $10,000 to $16,000. This means Mr and Mrs Tan may apply for the grant as their combined household income is below the EC income ceiling.
Cons of Buying a New EC
- Few launches
- Usually in less accessible locations
- Bound by HDB rules for 10 years
ECs are a great option for Mr and Mrs Tan, but that’s assuming they can find a suitable EC launch at the time of their application. Compared to private condo launches, EC launches happen less frequently.
While there can be over 20 new launch condos, there are usually less than five EC launches per year. For 2024, it seems that there’s only one EC launch, which was Lumina Grand in January. Fingers crossed that there will be more!
ECs are also usually at far-flung locations such as Punggol, Woodlands, and Sembawang, with reduced access to public transport (maybe just a bus or a less busy MRT station). So unless the Tans work from home often, or own a car, don’t mind walking further, waiting for the bus, or taking a taxi, an EC may not be super viable.
As mentioned above, the five- and 10-year marks are important to ECs. This is because ECs are considered HDB properties for the first 10 years. This means you have to follow the five-year MOP rule. After 10 years, ECs become privatised. In terms of eligibility, you must also fulfil other conditions such as the property ownership and resale levy rules.
Buying a Private Condominium
One of the traditional 5Cs of Singaporean aspirations – Cash, Car, Credit Card, Condominium and Country Club membership – a private condominium is often seen as a mark of having “made it”. Naturally, condos are the most expensive option of the three.
The Tans, searching on PropertyGuru for private condos with their budget of $700,000, brings up mostly 1-bedroom units or studio apartments.
Pros of Buying a Private Condo
- Prestigious
- Well-equipped with facilities
- No income ceiling
- No renting and/or selling restrictions
For young working professionals like the Tans in higher-paying jobs, staying in a private condo means they get all the benefits of living in a beautifully designed property, with facilities like a pool, gym and BBQ pits, and round-the-clock security.
In addition to having no income ceiling, private properties are not bound by HDB restrictions to do with renting and selling. This is why many people choose private condos as investment assets. The Tans won’t have to wait five years if they want to sell or rent out their condo.
Cons of Buying a Private Condo
- Expensive
- Smaller in size
Buying a private condo may seem like the best and most prestigious choice if you can afford it. However, with the Tans’ budget of $700,000, they probably can only afford very small one- to two-bedroom units in less accessible areas, like the Outside Central Region (OCR).
If you don’t consider the condo facilities and only compare the actual unit itself, this seems a lot less comfortable than a 4-room resale flat near an MRT station, which you can get at a similar price point. For $700,000, you can get a new-ish 3-room HDB flat on a high floor in a desirable, city fringe neighbourhood with money left over for renovation.
In terms of how long a new launch condo will take to build, we’re looking at a similar timeline to BTO flats. Construction delays brought on by pandemic-induced manpower and supply shortages mean you’ll have to wait. But if you’re looking at a resale condominium, you can move in more quickly.
HDB Resale Flat, EC, or Condo: Which Should You Choose?
If you value having a larger space and already have your gym membership, an HDB resale flat may be the most cost-effective option for you.
If you prefer to live in a property with condo facilities, new ECs are a good option as they are still a type of subsidised property and cheaper than most private condo units.
However, if your heart is set on buying a condo unit, you can probably still afford one, just that it’s likely to be very small and inconveniently located. This is not quite suitable for young couples planning a family.
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