THE AFFORDABILITY OF HDB 5-ROOM UPGRADERS FROM 1998 TO 2003

Abstract

The private housing affordability of HDB upgraders is of special concern as this segment of the market represents a potentially large and stable portion of the domestic demand for private properties. Recent fluctuations in private property prices as a result of the implementation of the anti-speculation measures in 1996, the Asian Financial Crisis in 1997 and the World Trade Centre terrorist attack in 2001 have significantly affected the housing affordability of upgraders. Hence, this study attempts to examine the post effects of these events on the private housing affordability of HDB 5-room Upgraders from 1998 to 2003. A working definition of affordability that relates income of HDB households, accumulated asset wealth and mortgage instalments to private property prices, i.e. the Debt-to-Service Ratio, is the measure adopted for comparison. The findings revealed that private properties were generally unaffordable to the Upgraders from the three estates during 1998 to 2003. However, the affordability levels have been gradually improving since 2002 due to decreasing prices of private properties in a weak property market. With wage reforms taking place, banks lower the market standard of DSR from 40% to 33%, and as a result, the HDB upgraders can only afford lower-priced private housing.