Are Resale HDBs Really Unaffordable In 2024?

When it comes to housing, always rethink using the “a” word.

By that, I mean affordability, which is the most dangerous thing one can say about Singapore housing. Bringing it up is bound to hit a nerve on either side of the fence: say that resale flats are affordable, and you get accused of being rich and out-of-touch. Say they’re unaffordable, and you’re accused of being entitled (typically followed by the suggestion that you should “see how bad it is in other countries.”)

There are few ways to discuss affordability without offending someone, however centrist or moderate your views may be. 

To some degree, it’s because no average Singaporeans – even if they meet the 3-3-5 guideline – ever feel their home is cheap. (The 3-3-5 guideline stipulates that you can safely afford a home if you have 30 per cent of the required capital, the monthly loan repayments are no more than 30 per cent of your monthly income, and the total price of the property is no more than five times your annual income). 

You can try and explain that rationally, 30 per cent of someone’s income for the next 25 years is affordable. But unless you’re talking to some kind of monk-like Zen master, nobody takes that kind of news without a sense of deep deprivation.

The other contributing factor is the constant news about million-dollar flats; and I can guess the “resale flats are affordable” statement is to counteract concerns following the record-breaking $1.73 million flat. Whilst these million-dollar flats are outliers, it’s hard not to worry when you consider we’re down to the last four towns without them.

It gets worse depending on who you say it to

There are some people for whom no amount of new BTO flats is helpful. Families where both spouses are Permanent Residents, for example, can’t get BTO flats. The same goes for those who can’t safely wait for three to four years of construction time (e.g., people burdened with abusive home environments), or lifelong singles who need to move out, but can’t buy a BTO flat for age or other eligibility reasons. 

Now from a cool, detached, policymaking POV, it’s easy to say that – based on average numbers – even these people have options. But in an increasingly volatile economy, with rising flat prices, those options now come with a huge amount of anxiety and pain; and to use the “affordability” word – even if you can quantify it as a fact – is dismissive of that human element. 

For struggling homebuyers, I’d say focus on the middle or “the norm”

If you’re suffering from price anxiety, here’s something that might help:

Ignore the extremes

Most resale flats will not be a million dollars, just as most resale flats won’t be under $300,000. 

These transactions occur for a small handful of people. Most people probably won’t ever sell, or buy, your resale flat for a million dollars – yet.

So rather than focus on these incidents, just pay attention to average/median prices in the neighbourhood where you’re buying; those are the true numbers you’re likely dealing with.

Here’s what average prices in 2024 look like so far (sorted by lowest to highest by the 4-room flat category):

In 11 out of the 26 estates here, you can still purchase a 4-room flat for less than $600,000. For those on a budget, you can even go for older ones which would be cheaper.

The truth is, there is a high price to pay for convenience in Singapore. Anything in a good location, or one that is near convenient transport options will undoubtedly be in high demand. With the expensive cost of owning a car (sky-high COE prices), this may have played a role for some people in forgoing a car and instead willing to pay higher prices for a well-located HDB. 

And while a $500,000 or $600,000 flat is hardly a relaxing figure to look at, you may at least feel a bit less anxious. 

(But you still won’t feel it’s affordable. No one ever does, when it’s the single most expensive thing you’ll probably ever buy in your life).

Meanwhile, in other property news

• What’s a fair price for your HDB flat in 2024? Here are some of the main factors to look at. 
• You can’t control the direction of home loan interest rates; but you can choose to pay down more of your loan to keep it in check. Does that make partial prepayments a good idea right now? 
• Don’t mind living atop a cafe or a small trading shop, provided the location is central? Or maybe if it’s freehold and cheap? Then check out these options. 
• Here’s a quick look at how to spot potentially undervalued properties, in the expensive current market. 

For more on the Singapore property market, follow us on Stacked. 

Weekly Sales Roundup

Unfortunately, we do not have the latest data for August due to today being a holiday. We will update this accordingly in next week’s post.