The affordability of housing in Singapore and the various housing grants available

I'm at an age where many of my friends who are attached, are planning for their marriages. One concern i've heard many many times is the affordability of housing in Singapore. As most of my friends are still studying, they are worried that they would not have enough money to buy a house. What happens if they want to get married but cannot afford to pay for the house? No money, no house? Are these your concern too?

The government of Singapore have said that they will make housing affordable for most Singaporeans. They will make sure every couple can afford a house as long as they are working. Actually, in Singapore, everything is planned out for us to buy a house. Let's see if housing is really affordable in Singapore for different income level groups.

Different income levels and their eligible housing grants

A couple who wants to purchase their first home will most probably apply for a Built To Order (BTO) flat. The government has subsidized these flats and this is especially so for first time buyers. There are various grants available such as the additional housing grant and the special housing grant. The special housing grants of up to $20,000 was initially given to low income families but now it is extended to middle income families. Let's take a look at the cost of housing for 2, 3, 4 and 5 rooms flats in Singapore. What are the grants you will be eligible for your income bracket?

1) A family income of less than $2000 (2 Room flat)

Can a family with a combined income of less than $2000 still own a house in Singapore? Yes they can. With reference to the latest March 2014 BTO flat price in Yishun, a 2 room flat cost around $94,000 to $118,000. This is a 47sqm house with one bedroom, one bathroom, one kitchen and one living/dining room. 

Let's say the couple has a household income of $1700 monthly and they buy the 2 room flat at $105,000, they will be eligible for an additional CPF housing grant(AHG) of $35,000 and a special CPF housing grant of $20,000. After deducting the grants, the net cost of the house is $50,000. If they take a loan for 25 years, the monthly housing loan payable is $182. This is quite affordable for their income of $1700.  

2) A family income of more than $2000 but less than $4000 

(3 Room flat)

With a family income at the above range, this couple can afford to buy a 3 room flat in Singapore. The March 2014 BTO 3 room flat price in Yishun is in the range of $150,000 to $186,000. This is a 68sqm house with 2 bedrooms, 2 bathrooms, one kitchen and one living/dining room.

Let's say the couple has a household income of $2600 and they buy the 3 room flat for $170,000, they will be eligible for an additional CPF housing grant of $25,000 and a special CPF housing grant of $20,000. After deducting the grants, the house now cost $125,000. If this couple takes a 25 years loan, their monthly housing loan payable is $490. Again, this is quite affordable for their income of $2600. It's only about 19% of their monthly income.

3) A family income of more than $4000 but less than $5000 

(4 Room flat)

With a family income of more than $4000, a couple can afford a 4 room flat in Singapore. A 4 room flat price in Yishun according to the March 2014 BTO launch is in the range of $252,000 to $302,000. This is a 93sqm house with 3 bedrooms, 2 bathrooms, one kitchen and one living/dining room. 

Let's say the couple has a household income of $4400 and they buy the 4 room flat for $275,000, they will be eligible for an additional CPF housing grant of $10,000 and a special CPF housing grant of $20,000. After deducting the grants, the house now cost $245,000. If this couple takes a 25 years loan, their monthly housing loan instalment payable is $987. 

5) A family income of more than $5800 (5 Room flat)

To buy a 5 room flat, a couple should have a combined income of more than $5800. The price of 5 room flats in Yishun is $316,000 to $386,000 in the March 2014 BTO. This is a 112 sqm house with 3 bedrooms, 2 bathrooms, one study room, one kitchen and one living/dining room. 

If the couple with a household income of $5800 buys the 5 room flat for $350,000, they will not be eligible for any grants. Any couples with combined income of above $5000 will not be eligible for any grants. If they take a 25 year housing loan, the monthly repayment amount is $1430. This is already 25% of the couple's gross monthly income.

Additional CPF Housing Grant at a glance

Source: HDB Website

Special CPF Housing Grant at a glance (From July 2013)

*Only for 2 to 4 room flats in non mature estates

Source: HDB Website

*For more information on the various housing grants for your income level, refer here: http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatCPFHousingGrant?OpenDocument

Buying a house with your CPF

Most couples will be able to buy their first house after working just 1-2 years. The down payment for a BTO flat is 5% of the house price on purchase and another 5% after the flat is completed.

For CPF, you can only use the money in your ordinary account for housing loans. For persons age 35 years and below, CPF contribution rate to ordinary account is 23%.


Here's a rough guide on how you can afford your house just using your CPF:

For Combined Income of $1700. 
CPF contribution in ordinary account is $391 monthly.
More than enough to pay the housing loan of $182 monthly for a 2 room flat at $50,000(after deducting grants).

For Combined Income of $2600
CPF contribution in ordinary account is $598 monthly.
Enough to pay the housing loan of $490 monthly for a 3 room flat at $125,000(after deducting grants).

For Combined income of $4400
CPF contribution in ordinary account is $1012.
Enough to pay the housing loan of $987 monthly for a 4 room flat at $245,000(after deducting grants).


As you can see above, most of us do not even have to pay extra cash for a house. The government has planned it out for us. As long as our monthly loan instalment payable is below 23% of our gross monthly income, we do not have to fork out any extra cash for the instalments.

For most of us, we can all afford a house. There is no need to worry about not being able to afford one because housing prices are so expensive now. The affordability problem therefore lies with us individually. If you buy a house more than what you can afford, then it becomes unaffordable. The truth is this, if you have low income, buy a small house. If you have higher income, then you can consider buying a bigger house.

I hope the above 5 scenarios of different income levels will be a rough guide for you to consider which type of house you can afford to buy. Take advantage of the various grants available and it will certainly lessen your financial burdens.

Share it with your friends who are planning for their new life too.

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