IMPACT OF INCOME CEILING ON THE AFFORDABILITY OF HDB FLATS FOR NEWLY MARRIED COUPLES

Abstract

With the prices of HDB flats increased by as much as 42% in 2008 as compared to 10 years ago and higher household incomes among Singaporeans, one thing has remained the same for more than 12 years now – the income ceiling of gross monthly household income of $8,000 for those purchasing new HDB flats. Thus many have questioned if the income ceiling should be reviewed as things now are quite different from 12 years ago. Some people have argued that for households which earn slightly more than $8,000 a month may find it difficult to afford resale HDB flats since they are much more expensive while it is better off to earn just less than $8,000 a month and enjoy the benefits of subsidised new HDB flats. Therefore, this study aims to find out the impact of income ceiling on the affordability of HDB flats for newly married couples. The first part of the study will evaluate the affordability levels of households earning less than $8,000 a month eligible to buy new HDB flats and households earning more than $8,000 a month buying resale flats. It is found that the affordability level is better for households earning from $7,000 to $7,999 with DSR at 13 to 11% whereas for those which are just slightly over the income ceiling that is between $8,001 to $8,999 the DSR changed drastically from 19 to 17% in 2008. The second part of the study seeks to analyse the affordability of HDB flats to newly married couples of different income groups. By constructing the affordability levels among different income groups, this study intend to determine which are the income groups that can afford public housing in Singapore as well as those that cannot afford. Overall, HDB flats are affordable to degree-holders, diploma-holders and professionals.