SANDWICH CLASS HOUSEHOLDS : HOUSING OPTIONS AND AFFORDABILITY

Abstract

In recent years, sandwich class's housing affordability is of key concern in many countries as well as in Singapore. Although the overall housing affordability in Singapore is still reasonable, sandwich class households with monthly income of between $8,000 and $10,000 are stuck in between because they are not eligible to buy heavily subsidized HDB new flats, while they are not able to afford private properties. Many studies about housing affordability have been done; however, little effort has been put on studying sandwich class's housing affordability. Therefore, the main objective of this report is to study sandwich class's housing options and affordability in Singapore by using Housing Price-to-Income Ratio and Debt Service Ratio. And the affordability benchmarks are set at 5 for HPI ratio and 30% for DSR. Recent transaction data of 4-room EC units and 5-room DBSS flats are collected through REALIS, URA, survey, and from agents. The results show that sandwich class household's affordability is decreasing over time, and they can hardly afford 4-room EC units and 5-room DBSS flats in current housing market. Causes of sandwich class’s decreasing housing affordability are concluded and a few recommendations are given to Singapore government to help relax sandwich class's housing affordability.