1k Income For House

After the mention of this fact at parliament by our DPM, it has caused quite the uproar from Singaporean netizens. Some interesting comments I came across include:

- "If so, I should be owning 5 properties already. How come I have difficulty having even one!"
- "I have a friend who earns $1,200 and his housing loan is not approved."

In general, most are in disbelief over this statement. However, this reflects how poorly informed people are of the various housing schemes and loan approval criterias.

My personal opinion is that the statement is not false but people's perception that is the issue here. And their view is not entirely wrong as well.

First let us put the truth to rest. The housing minister has also produced evidence that it is indeed a fact. It is indisputable, a $1k income can purchase a hdb flat. However, and it is a big however, subject to all the terms and conditions like qualifying for all the grants and taking up a 2 room hdb unit (it is not "easy" to qualify).

So, back to why the uproar. This is due to the sandwich class effect in Singapore. I will break up the combine salary class into 4 general types, namely less than $5k, between $5k to $10k, between $10k to $15k and more than $15k.

For the less than $5k, they are the subsidized class that is well taken care off and that is why $1k can afford a simple, no frills unit with all the available grants.

For between $5k to $10k, they usually are young graduates and expect a 5 room hdb flat. Resale is ridiculously priced and out of reach, BTO has competition from the rest of the majority of the population and no grants are available for them.

For between $10k to $15k, they usually are the slightly more well off. They could well afford a hdb but they exceed the income requirement. Hence, considering between resale hdb and condo, they would prefer and expect to stay in the condo. Furthermore, they definitely do not qualify for any grants at all.

For those above $15k, good for them. They have jumped out of the sandwich class and can afford their choices.

Therefore, bottom line in my opinion, it all boils down to expectations vis a vis affordability and availability of grant. And since majority, perhaps 80% of the population resides in the sandwich class, what the DPM said strikes a note to them as someone earning $1k can own a house but they themselves can't have what they expect.

Some consolation is that the personal income tax rate has been revised and it does help the sandwich class. However, I suppose this is quite a one off event but a property is normally equivalent to life time.

Well, few options available. Hope the government starts taking care of the sandwich class. Reinvent myself to jump out of the sandwich class. Live below my means by reviewing my expectations.

Cheers to all fellow Singaporeans in this caught in between class!