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 2021 in the various HDB towns.
The estimates will be based on the following assumptions:
- You’re taking HDB loan (maximising the 90% loan-to-value ratio, so the downpayment will be 10%)
- The loan tenure is the maximum 25 years, with the current interest rate of 2.6%
- 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% 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 2021 in the various HDB towns
| HDB town | Average price | Loan amount (90%) | Downpayment (10%) | Estimated monthly instalment | Min. gross monthly income |
| Ang Mo Kio | S$430,000.00 | S$387,000 | S$43,000 | S$1,755.70 | S$5,852.33 |
| Bedok | S$469,000.00 | S$422,100 | S$46,900 | S$1,914.94 | S$6,383.13 |
| Bishan | S$653,000.00 | S$587,700 | S$65,300 | S$2,666.22 | S$8,887.40 |
| Bukit Batok | S$442,000.00 | S$397,800 | S$44,200 | S$1,804.70 | S$6,015.67 |
| Bukit Merah | S$590,000.00 | S$531,000 | S$59,000 | S$2,408.99 | S$8,029.97 |
| Bukit Panjang | S$479,000.00 | S$431,100 | S$47,900 | S$1,955.77 | S$6,519.23 |
| Bukit Timah | S$873,000.00 | S$785,700 | S$87,300 | S$3,564.48 | S$11,881.60 |
| Central Area | S$681,000.00 | S$612,900 | S$68,100 | S$2,780.54 | S$9,268.47 |
| Choa Chu Kang | S$466,000.00 | S$419,400 | S$46,600 | S$1,902.69 | S$6,342.30 |
| Clementi | S$531,000.00 | S$477,900 | S$53,100 | S$2,168.09 | S$7,226.97 |
| Geylang | S$492,000.00 | S$442,800 | S$49,200 | S$2,008.85 | S$6,696.17 |
| Hougang | S$495,000.00 | S$445,500 | S$49,500 | S$2,021.10 | S$6,737.00 |
| Jurong East | S$482,000.00 | S$433,800 | S$48,200 | S$1,968.02 | S$6,560.07 |
| Jurong West | S$444,000.00 | S$399,600 | S$44,400 | S$1,812.86 | S$6,042.87 |
| Kallang/Whampoa | S$525,000.00 | S$472,500 | S$52,500 | S$2,143.59 | S$7,145.30 |
| Marine Parade | S$583,000.00 | S$524,700 | S$58,300 | S$2,380.40 | S$7,934.67 |
| Pasir Ris | S$570,000.00 | S$513,000 | S$57,000 | S$2,327.32 | S$7,757.73 |
| Punggol | S$501,000.00 | S$450,900 | S$50,100 | S$2,045.60 | S$6,818.67 |
| Queenstown | S$654,000.00 | S$588,600 | S$65,400 | S$2,670.30 | S$8,901.00 |
| Sembawang | S$435,000.00 | S$391,500 | S$43,500 | S$1,776.12 | S$5,920.40 |
| Sengkang | S$484,000.00 | S$435,600 | S$48,400 | S$1,976.18 | S$6,587.27 |
| Serangoon | S$541,000.00 | S$486,900 | S$54,100 | S$2,208.92 | S$7,363.07 |
| Tampines | S$513,000.00 | S$461,700 | S$51,300 | S$2,094.59 | S$6,981.97 |
| Toa Payoh | S$524,000.00 | S$471,600 | S$52,400 | S$2,139.51 | S$7,131.70 |
| Woodlands | S$444,000.00 | S$399,600 | S$44,400 | S$1,812.86 | S$6,042.87 |
| Yishun | S$425,000.00 | S$382,500 | S$42,500 | S$1,735.29 | S$5,784.30 |
Do note that these income estimates are all based on the average price, which may be higher or lower than the actual price of the flat.
Where are the most affordable HDB resale flats at?
Based on the average prices we’ve collated over the first half of 2021, the most affordable resale flats are generally in Yishun, Ang Mo Kio, Sembawang, Bukit Batok, Jurong West and Woodlands. The estimated income range to buy a resale flat in either one of these estates is around S$5,800 to S$6,000.
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 cheap flats in mature estates, including Ang Mo Kio, where the average price is on the lower end of the spectrum. The downside is that they’re probably older flats.
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Where are the most expensive HDB resale flats at?
The most expensive flats are generally in the centrally located estates, such as Bukit Timah, Central Area, Queenstown, Bishan and Bukit Merah. These are also where you can find million-dollar flats and rare types of flats such as maisonettes.
With the average prices ranging between S$600,000 and S$900,000, you’ll need to earn at least S$8,000 to S$12,000 to afford a flat in one of these estates.
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Whichever location and property type you’re buying, you should ensure that it’s within your means. In the case of resale flats, whether you’re taking HDB loan or 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.
Buying a resale flat soon? Which areas are you considering? Let us know in the comments section below or on our Facebook post.
If you found this article helpful, 99.co recommends Deciding between HDB loans and bank loans? Here’s a quick reference and Common mistakes you’ll want to avoid when paying off your mortgage.
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Frequently asked questions
How do I buy an HDB resale flat?
Firstly, check your eligibility and apply for the HDB loan eligibility letter (HLE) if you’re applying for an HDB loan. After you’ve found the right flat and granted the option to purchase (OTP), you’ll have to request for a valuation from the HDB. If you decide to buy the flat, you can then exercise the OTP and submit the resale application.
Can you get a grant for an HDB resale flat?
Yes, the maximum grant that you can get is S$160,000. Grants that you may be eligible for are the Enhanced Housing Grant, Family Grant and Proximity Housing Grant.
Can singles buy a 4-room resale flat?
Yes, singles aren’t restricted to the type of flats they can buy. Unlike BTO, they can also buy from any estate, mature or non-mature.
The post How much do you need to earn to buy an HDB resale flat? appeared first on 99.co.
