If you’re on the path to becoming a median-income earner in Singapore, it’s time to be worried.
According to Dinesh Dayani from Dollars and Sense, median-income earners here may not even be able to afford a 4-room HDB Flat in more than half on Singapore.
Dinesh deduced this from comparing wages and property prices.
“Being that median wages are at $3,949, and we use a rule of thumb for home prices to be roughly 5 times your annual combined gross monthly income (note investopedia’s rule of thumb is 2 to 2.5), median wage earners should be buying homes that cost $473,000.”
While real median wages increased by only 26.4 percent from 2006 to 2016, prices of prices of:
– HDB flats went up over 92 per cent;
– Non-landed homes went up close to 121 per cent; and
– Landed homes, prices went up close to 143 per cent
This is based on data from the Singapore Real Estate Exchange.
During this time, prices of individual property types dipped:
– For HDB flats, prices were at their peaks in April 2013, since then, prices have fallen approximately by 11 per cent;
– For non-landed homes, prices were at their peaks in January 2014, since then, prices have fallen slightly over 7 per cent; and
– For landed homes, prices were at their peaks in February 2014, since then, prices have fallen roughly 12.5 per cent
Though prices fell, this drop has barely impacted the overall increase in property prices in the past 10 years.
Dinesh says that wiley property developers have also found ways to jack up prices:
“The ability of property developers to hold out or use loopholes in government policies to hang on to properties rather than lower prices underscores the fact that the property market is not in the doldrums. And that there is much more room for prices to decrease.”
Young people, you’ve been warned: Plan ahead and save!