Many people think that only the rich and well-to-do can afford private condominiums in Singapore because these properties are commonly priced twice or thrice as much as HDB flats. While it is true private condominium units are more expensive than public housing, the reality is that they might also be more affordable than you think.
In this guide, we analyse how much the more affordable condos in Singapore cost, and work backwards to calculate just how much you should be earning to comfortably take up a home loan for a private condo.
Want to save more on your home loan? Compare the best mortgage rates on PropertyGuru Finance, or contact us for more personalised advice and recommendations:
Buying A Condo in Singapore
First, here are some basic things you need to know about financing and paying for a private condo in Singapore.
Financing and Grants: Bank Loan Only, No Housing Grants Whatsoever
You can only finance a private condo through a bank loan. Private property is not eligible either for HDB loans, or any housing grants and subsidies from the Government.
Debt Servicing Ratios: TDSR Applies
Getting a bank loan approved for a condo is relatively straightforward, as it mainly takes into account your credit rating and Total Debt Servicing Ratio (TDSR), in other words, how much of your income goes to repaying debts each month.
As long as your TDSR does not exceed 60% of your monthly gross income, and you can pay for the minimum downpayment of 25% (at least 5% must be paid in cash and the remaining 20% can be paid using your CPF or cash), the rest of the requirements could be pretty straightforward for you.
There is no limit to how much of your TDSR you can devote to paying for your mortgage instalment—so if you have no other debts, you could use the full 60% of your income for monthly payments if you want, with a shorter loan tenure and less interest costs, although this would mean you would not be able to borrow any more money for any purpose (e.g. a car or personal loan) until the mortgage is repaid.
Likewise, if you already use 40% of your TDSR on other debts and credit, you will only be able to pay for a maximum monthly instalment equivalent to 20% of your income, with a corresponding loan tenure.
Fewer Restrictions on Purchasing Eligibility, Income Cap and Property Ownership
Unlike HDB properties, anyone can buy a private condo unit, even foreigners. Also, it is easier to purchase a private condo because there is no income ceiling (unlike new executive condos and HDB flats). Additionally, there are no restrictions on ownership of other properties as well, so you can be an existing owner of a HDB flat and still buy a private condo. You will need to pay Additional Buyer’s Stamp Duty (ABSD) for owning multiple properties though.
Now that we have a rough sense of our eligibility and what to expect when buying a condo, let’s analyse their prices and calculate how much we need to earn to afford one.
How Much Does a Private Condo Cost?
Condo prices in Singapore vary widely, depending on factors like the size of the unit, the location of the development and more. For this guide, we’ll use 3-bedroom units as the case study—these are a good size for owner-occupiers, such as young couples and families who are upgrading to private property.
Generally, in the suburban districts in the Outside Central Region (OCR), you can find very affordable three-bedders at around $900 to $1.5 million. For example, 3-bedroom unit at Treasure at Tampines (which is known as one of most affordable new launch condos at the moment) is only $870,000.
As we get closer to the city, prices increase. In the city fringe (Rest of Central Region, or RCR), 3-bedroom condos cost around $1.5 million to $3 million. Take the popular Normanton Park which was launched in January 2021—the 3-bedders start at around $1 million, and the more spacious units cost upwards of $1.6 million.
Of course, the city (Core Central Region, or CCR) is where most of the premium and luxury projects are located. While you may be able to find small 3-bedroom units slightly under $2.5 million, most of them cost way more—the sky’s the limit!
|
Area |
Average Cost of 3-bedroom Private Condo Units in Singapore |
|
Core Central Region (CCR) |
$2.5 million and up |
|
Rest of Central Region (RCR) |
$1.5 million to $3 million |
|
Outside Central Region (OCR) |
$900,000 to $1.5 million |
How Much Do You Need to Earn to Afford a Private Condo Unit?
As mentioned above, homebuyers can only take a bank loan and—at maximum, assuming no other debts—devote 60% of their monthly gross income to mortgage repayments (ie. the TDSR rule).
There are two main elements to think about:
- The upfront minimum downpayment of 25% (of which at least 5% must be in cash)
- The long-term and recurring monthly mortgage repayments
These are the steps you need to work backwards to your desired income:
Disclaimer: In this example, we can only work backwards based on the rules and regulations. However, when we assess affordability, you should consider not just your debt servicing limits, but also your cash flow situation. After all, it won’t make sense even if you pass the legal hurdles but fail to consider your daily living expenses.
1. Work Out the Downpayment and Loan Quantum
First, decide how much you want to loan and ‘split’ the condo’s price accordingly. For example, if you are eligible and want to take the maximum 75% loan, then work out the sums for your 25% downpayment and the 75% loan quantum.
|
Condo price |
Breakdown |
|
$1,000,000 |
$250,000 downpayment, $750,000 loan |
|
$1,500,000 |
$375,000 downpayment, $1,125,000 loan |
|
$2,000,000 |
$500,000 downpayment, $1,500,000 loan |
2. Calculate the Monthly Mortgage Repayments
Based on the loan amount, interest rate, and your preferred or maximum eligible loan tenure, calculate how much you would need to pay per month to fully repay the debt. For convenience, use our mortgage calculator to compute the estimated monthly repayments you would need to make.
Let’s say you are looking at 25 years tenure and an interest rate of 1.6% p.a..
|
Condo price |
Monthly mortgage repayments (1.6% p.a., 25 years) |
|
$1,000,000 (i.e. $750k loan) |
$3,035 per month |
|
$1,500,000 (i.e. $1.125 mil loan) |
$4,552 per month |
|
$2,000,000 (i.e. $1.5 mil loan) |
$6,070 per month |
3. Work Out Your TDSR
Decide how much of your monthly income you intend to spend on paying the mortgage instalments. This will decide your preferred TDSR ‘limit’ and you can then work out the ‘full’ income you need to earn to afford it (i.e. 100%).
If you are trying to find out the minimum income you need to earn, then legally you can use up to 60% of your income on the mortgage (assuming you have no other debts). If you want a buffer and don’t want to ‘spend’ your entire TDSR quota on the home loan, you can adjust downwards.
|
Condo price |
Minimum income needed (based on 60% TDSR) |
|
$1,000,000 |
$5,058 per month |
|
$1,500,000 |
$7,586 per month |
|
$2,000,000 |
$10,117 per month |
Median Salary in Singapore: How Many of Us Can Afford Condos in Singapore?
According to the Manpower Research and Statistics Department of Singapore, the median gross monthly income from work (including employer CPF contributions) of full-time employed residents in 2020 is $4,534.
Based on this figure and the table above, it would seem that an entry-level condo in the RCR and OCR is affordable for many Singaporeans. This is especially if you consider the minimum income derived above as that of a working couple, who are joint-borrowing to finance a home together, instead of an individual’s income.
For many, it is not the monthly salary and mortgage repayments that is the issue—it is the hefty downpayment. So, while it may be a stretch to buy a private condo as your first home, once you have worked for a few years and managed to save up enough for the downpayment, you can consider buying a condo if you want.
Are You Planning to Buy a Private Condo?
The best place to begin your condo buying journey is on PropertyGuru! You can start by browsing condos (and other properties) for sale on our portal, sussing out the best deals and comparing prices of the many listings in the market. At the same time, if you’re shopping for a home loan or need advice on how to finance this property, you can reach out to our home loan advisors (PropertyGuru Finance). They can offer expert advice tailored to your unique situation—all for free!
Good luck!
Disclaimer: Information provided on this website is general in nature and does not constitute financial advice.
PropertyGuru will endeavour to update the website as needed. However, information can change without notice and we do not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, PropertyGuru, its employees do not accept any liability for any error or omission on this web site or for any resulting loss or damage suffered by the recipient or any other person.More FAQs on Condo Affordability in Singapore
How Much Do I Need to Earn to Afford a Condo in Singapore?
This depends on the price of the property as well as your personal financial situation. If you need guidance, it’s best you check with a home loan advisor for more tailored guidance.
How Do You Know If You Can Afford A Condo?
One way is to work backwards from the price of the condo, taking into consideration your current cash flow, the mandatory debt servicing ratios, and your monthly income. If you find that too tedious, you may ask a home loan advisor to work it out for you.
Why is it a Bad Idea to Buy A Condo?
Whoever said it was? Everyone has a different ‘dream’ home and for many, it is to live in a condo. To understand your finances better to help you work towards your desired property, speak with a home loan advisor.
How Much Money Should I Have to Buy a Condo?
When it comes to assessing affordability, you should consider both the upfront payment required, as well as the long-term recurring costs (the monthly mortgage repayments). How much these are and how much you can afford depends on the price of the condo and your income, among other things.
