How Much Must You Earn to Afford a Landed Property?

Landed property are considered exclusive in Singapore due to the scarcity and the limitations placed upon them. In fact, only Singaporeans and Permanent Residents (PR) of at least 5 years are allowed to purchase a landed property in Singapore.

According to a research done by ValueChampion in 2018, only the top 5% of earners are able to afford a landed property in Singapore. In this article, we will be looking at how much you actually have to earn to afford a landed property, and how richie rich are these people who can afford them.


How much must you earn to afford a landed property?

Assumptions made:

  1. Owner age are less than 35 years old, which means that the loan tenure is the maximum of 30 years.
  2. Owner do not have any prior debt or financial commitment.
  3. Monthly instalments is calculated using an interest rate of 3.5%, which is the recommended rate from MAS to calculate instalments amount.
  4. Income remains constant for the entirety of the duration.
  5. Maximum loan amount taken based on their income in order to reduce the initial cash outlay for the purchase.

This is the average listing price of different types of landed properties in Singapore as of Q2 2020. We will be using this price as the basis of calculation.


Terraced House

The average listing price of a terraced house is at $3.2M.

For private properties, the maximum that can be borrowed from the bank is 75% of the unit value.

maximum amount : 3.2M * 75% = 2.4M

For private housing, the maximum amount that the owner can borrow is up to a maximum of 60%, due to the total debt servicing ratio (TDSR).

Based on the above chart, the minimum income required is slightly below $18K, roughly $17,950 to be more exact. The monthly instalment is $10,780.

The initial outlay required is the 25% downpayment would be $800k, $113k for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $17,950 per month, you will need to also have a savings of at least $916k.


Cluster House

The average listing price of a cluster house is at $3.4M.

For private properties, the maximum that can be borrowed from the bank is 75% of the unit value.

maximum amount : 3.4M * 75% = 2.55M

For private housing, the maximum amount that the owner can borrow is up to a maximum of 60%, due to the total debt servicing ratio (TDSR).

Based on the above chart, the minimum income required is above $19k, roughly $19,100 to be more exact. The monthly instalment is $11,460.

The initial outlay required is the 25% downpayment would be $850k, $121k for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $19,100 per month, you will need to also have a savings of at least $974k.


Corner Terrace

The average listing price of a corner terrace is at $4.5M.

For private properties, the maximum that can be borrowed from the bank is 75% of the unit value.

maximum amount : 4.5M * 75% = 3.38M

For private housing, the maximum amount that the owner can borrow is up to a maximum of 60%, due to the total debt servicing ratio (TDSR).

Based on the above chart, the minimum income required is above $25k, roughly $25,300 to be more exact. The monthly instalment is $15,160.

The initial outlay required is the 25% downpayment would be $1.125M, $165k for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $25,300 per month, you will need to also have a savings of at least $1.3M.


Semi-Detached House

The average listing price of a semi-detached house is at $4.8M.

For private properties, the maximum that can be borrowed from the bank is 75% of the unit value.

maximum amount : 4.8M * 75% = 3.6M

For private housing, the maximum amount that the owner can borrow is up to a maximum of 60%, due to the total debt servicing ratio (TDSR).

Based on the above chart, the minimum income required is almost $27k, roughly $26,950 to be more exact. The monthly instalment is $16,170.

The initial outlay required is the 25% downpayment would be $1.2M, $177k for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $26,950 per month, you will need to also have a savings of at least $1.38M.


Bungalow

The average listing price of a bungalow is at $9.6M.

For private properties, the maximum that can be borrowed from the bank is 75% of the unit value.

maximum amount : 9.6M * 75% = 7.2M

For private housing, the maximum amount that the owner can borrow is up to a maximum of 60%, due to the total debt servicing ratio (TDSR).

Based on the above chart, the minimum income required is almost $54k, roughly $53,900 to be more exact. The monthly instalment is $32,340.

The initial outlay required is the 25% downpayment would be $2.4M, $369k for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $53,900 per month, you will need to also have a savings of at least $2.772M.

Do note that this is an estimated figures that help you with your initial financial plans, and does not represent the actual values. You will need to refer to the respective banks for actual loan amounts.


Last words

Landed property are highly sought-after in land-scare Singapore, mainly because it is usually freehold. However, the maintenance of the property usually fall upon the owner as there is no town council or management office to maintain the property. Hence, the miscellaneous fee for owning a landed property usually pile up very fast.

In addition, many owners who purchase a landed property usually prefer to start new and demolish the original property and rebuild their ideal home from scratch. This would minimally cost upwards of $1 to $2million.

Landed Property TypeMonthly Income
Terraced House$17,950
Cluster House$19,100
Corner Terrace$25,300
Semi-Detached House$26,950
Bungalow$53,900

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