Relationship Of Household Income To Demand

Couples with household income of $8,000 are not eligible for HDB subsidized property prices

. Assuming that couples belonging to the average household income computed at $8,000 would like to buy a condominium property. They need to have a Cash-over-valuation amount to help them pay the down payment. This is true only if this group of people already have an HDB. However, if these people were buying for the first time, they would be able to afford only properties with market values ranging from $1.08m to $1.35m at the maximum.

A household comprise of two persons could comfortably stay in a condominium that has an area of about 800 to 1,100 square feet. The conservative estimate of maximum affordable property level of $1m to $1.1m could present a $909 psf to $1,375 psf household affordability level largely depending on the size of the unit purchased.

The possible effects for this situation are:

A drop of the HDB supply would lead to a corresponding expected HDB price increase.

The increase of HDB price leads to some extent an upgrading or increase of the mass market condominium market prices (normally funded by HDB sales profits)

The affordability level of the household can support property prices ranging from $909 psf to $1,375 psf, which is about 800 sq feet to 1,100 sq feet. This holds true if they are made on direct purchase skipping HDB and that the household total average income level is about $8,000.

Unfortunately, this constitute as one of the good reasons for the Singapore government to raise real estate property prices because everyone could very well afford it. They will then pass the cost to the property developers, which will then pass on to you as a matter of chain reaction. The private properties in Singapore mass market may even possibly reach to the level of $1,200 psf because of the simple understanding that it is affordable. This condition may prevail considering that the employment is stable and that the GDP is also growing.

HDB prices could vary because of the lack of balance between supply and demand. The Singapore government hasnt responded to the under supply of HDB, which resulted to massive increase of prices. The timing for the increase of the prices relates to the fact that the prices were already affordable to the common household. This boosts the ability of the Singapore government to benefit from more land sales. However, the context of releasing more private lands to build condominiums by the Singapore government, would possibly create an oversupply in the private residential market sector.

by: Shirley Tan

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