Are HDBs More Affordable (Or Not) Than Before?
HDB prices have risen (for a new 4-room flat) from $80,000 in the 1980s to over $300,000 today before HDB grants and subsidies.
Yet at the same time, our incomes have also risen and more households are dual income as more childcare places have been made available to working parents.
The question I hope to answer is whether HDBs are more affordable (or unaffordable) than before?
Calculating Affordability of HDB Flats Over the Decades
I compared the price of a new 4-room flat before grants and subsidies (A), to the monthly median household income (B).
I then took (A) divided by (B), which shows the number of months of household income the flat is priced at.
Results of HDB Flat Affordability Over the Decades
| Year | Price of new 4 room flat before grants and subsidies (A) | Monthly median household income (B) | A / B (the lower the ratio, the more affordable) | Home Ownership Rate (%) |
| 1980 | $80,000 | $990 | 81 | 58.8 |
| 1990 | $170,000 | $2,296 | 74 | 87.5 |
| 2000 | $180,000 | $3,607 | 50 | 92.0 |
| 2010 | $376,300 | $5,000 | 75 | 87.2 |
| 2018 | $380,000 | $6,984 | 54 | 90.7 |
The sources of each data point in (A) and (B) are hyperlinked.
In the 1980s, a new 4-room flat costs 81 months of household income.
In the 1990s, a new 4-room flat costs 74 months of household income.
In the 2000s, a new 4-room flat costs 50 months of household income.
In the 2010s, a new 4-room flat costs 75 months of household income.
In 2018, a new 4-room flat costs 54 months of household income.
Do keep in mind that these calculations are BEFORE grants and subsidies, which have been increased over the years (see the Enhanced CPF housing grant).
Conclusion:
Although prices of a new 4-room HDB flat have risen, monthly median household incomes have caught up too.
A new 4-room HDB flat today is more affordable than in the 1980s.
However, in the 2010s, HDBs were more unaffordable (due to a sudden spike in HDB prices and incomes did not increase at the same rate).
That being said, HDB affordability in 2018 has improved greatly compared to 2010, and is comparable to 2000 when HDBs were at their most affordable (with respect to median household incomes).
Are HDB Flats More Affordable Than Before?
It depends, on factors such as:
- which benchmark you are comparing your situation today to (e.g. 2000s or 1980s),
- whether you’re buying a flat in a mature or non-mature estate,
- whether you’re buying a new or resale flat,
- how many grants you are eligible for,
- your median household income,
- your other financial commitments,
- your future earnings as a household, and more.
About The Data
All data in the table were found on public sources, and there were certain choices made in the data.
- New 4-room prices in 2018: BTO prices ranged from $279,000 (Sengkang) to $380,000 (Toa Payoh). I chose the most expensive price.
- Monthly median household income: Some sources did not state whether employer CPF contribution was included or not. For sources that did, I chose the number without employer CPF contribution (to err on the conservative side when calculating affordability).
- Homeownership rate: I’ve included this data at the rightmost column to compare how our homeownership rates have risen over the decades.
If you have come across more robust data sources, or have an alternative way to evaluating whether HDBs are more or less affordable, please share your views in the comments.
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Photo of BTOs by Dollars and Sense.
