Are BTO flats still affordable for first-time home buyers?

Victor Kang8 Jun 2021

Prices of four-room to five-room BTO flats have increased 2.4 times from $208,250 to $496,760 from 2001 to 2020, but the median income has only increased 1.95 times from $4,716 to $9,189 over the same period, showed Department of Statistics data.

With home price growth outstripping income growth, netizens have asked whether public housing in Singapore remain affordable for first-time buyers.

They noted that prices of four-room to five-room Build-To-Order (BTO) flats increased 2.4 times from $208,250 to $496,760, on average, between 2001 and 2020. The median income of employed residents, on the other hand, only grew 1.95 times from $4,716 to $9,189 over the same period, showed Department of Statistics data.

Netizens also point to “the annual compounded growth, where the average BTO price (4.4%) outgrew the monthly household median income (3.4%) by approximately 1 percentage point over the 20-year period”, said Professor Sing Tien Foo, Director at the Institute of Real Estate and Urban Studies (IREUS) and Head of Department of Real Estate, National University of Singapore.

“I would argue however that housing affordability should look at more indicators to get a clearer picture. The price to income ratio (PIR) for example, tells a more nuanced story,” he wrote in an article published by Channel News Asia (CNA).

He revealed that the city-state’s average PIR ratio of 4.1 for four- to five-room BTO flats for the past 20 years from 2001 to 2020 “is within a reasonable range of affordability”.

“The ratio is even lower if you take into account the various CPF housing grants for first-time homeowners,” he said.

These grants, which range between $5,000 and $80,000, are given to HDB buyers with household income of below $9,000 per month.

He believes the increase in the average prices of BTO flats and the decline in the median household income during the post-COVID period has contributed to the increase in the PIR ratio. “So, affordability has declined marginally in 2020 compared to the pre-COVID ratio of 4.1 in 2019,” he said.

“It is worth noting that while the average PIR measures the overall affordability level for BTO flats in Singapore, the PIR is higher in mature estates and bigger flats.”

He explained that those wanting to acquire BTO flats within mature estates will have to accept that such flats are more expensive given their location, amenities and close proximity to transport nodes and malls.

In November 2020 BTO sales exercise, four- and five-room flats in Bartley Beacon within the mature estate of Toa Payoh are priced from $466,000 and $726,000, respectively.

And despite their high prices, the flats were oversubscribed by 4.978 times.

However, Professor Sing noted that homebuyers still have more affordable options. Three-room and five-room flats in Sun Sails within the non-mature estate of Sembawang, for instance, are priced lower at $163,00 and $388,000, respectively.

“So, it boils down to a question of choice,” he said.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email:


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