Can a fresh graduate starting their career afford a condo / apartment? If you are an undergraduate or fresh graduate thinking of buying a private home, then you have come to the right place! In this article, we look at what fresh graduates can afford in the private home sector across all the districts in Singapore (excluding landed homes).
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Reader questions like the one above rarely have a clear-cut answer. The "right" move depends on your finances, timeline, long-term goals, and how much downside you're prepared to accept if things don't go to plan.
That's the hardest part of any property decision, not finding information, but understanding what it means for your situation before committing.
Over time, that's also why we decided to work with agents who shared the same data-driven and advisory-led approach behind our editorial, consultants who could help readers think through decisions more objectively, rather than simply push transactions.
Today, the team has worked with more than 2,000 clients across over $5B in property transactions.
What the table above means
The median graduate salary for each faculty can be seen on the 2nd row
The median monthly mortgage payment required for each district is listed in the 2nd column To simplify things, we assume a household income of 2 graduates from the same faculty and together, they form a household. Median prices are obtained from URA and we only consider homes that are 100 Sqm / 1076 Sqft or less to remove large homes that graduates are unlikely to purchase, and the prices of which may skew our data.
To determine if they can purchase the home, we assume that they can pay the necessary upfront costs (e.g. taxes and the 20% down payment). With that out of the way, their affordability is determined by whether they can fulfil the Total Debt Servicing Ratio (TDSR). As of October 2017, the TDSR stands at 60%. We assume that the household has no other debt (e.g. personal loan, car loans, credit cards etc.)
Finally, we only cover graduates from the following faculties: Accounting, Arts & Social Science, Business, Computer Science, Dentistry, Engineering, Law, Medicine and Science.
Graduate income data is obtained from NUS.
The resulting figures show the monthly mortgage payments as a percentage of household income. Anything above 60% has breached the TDSR limits and is not allowed.
It’s green for us, so we can afford it!
Now before you think about splashing around the condominium pool on the weekends, take note that the table above only shows whether you qualify under the TDSR rule. Qualifying does not equate to having the ability to purchase a private home – the upfront costs for private homes are off the charts to a fresh graduate!
Apart from having little to no savings (like most fresh graduates) and an overhanging student loan, owning a condominium incurs other costs like legal fees, maintenance and higher taxes. This reduces your cash flow early on in life that can potentially be used to invest for higher returns, or saved up to start a business someday.
Here’s the cash you need upfront to buy a condominium / apartment:
So, most graduates can technically afford a loan, but unless you strike the lottery or have parental blessings, it could take a long time to save up for that down payment.
As always, if you have any questions feel free to reach out to us at stories@stackedhomes.com! If you want to read more about buying a condo you can do so here: 10 things a first time condo buyer should look out for to avoid regret
The questions our readers send in are rarely about the market in general. They’re about a home they’re considering, a timeline they’re working towards, or a trade-off they’re trying to make.
That’s where we usually help readers go a step further, applying the same research and decision-making framework behind our articles to their own situation.
If you’re facing a similar decision and would like someone to help you think it through before you commit, you can book a one-to-one consultation here.
And if you simply have a question or want to share a thought, feel free to write to us at stories@stackedhomes.com. We read every message.
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