It was revealed by Minister for National Development Desmond Lee in Parliament yesterday  (6 Feb) during his speech on the debate on two parliamentary motions filed by him and Mr Leong Mun Wai, that close to 70 per cent of Build-To-Order flats are affordable with S$8,400 median household income.

Mr Lee said in his opening remarks for the debate on two parliamentary motions, “Close to 70 per cent of the Build-To-Order flats launched in 2022 across all estates can be affordably purchased with (the median Singaporean household income of) S$8,400 at a mortgage servicing ratio (MSR) of 25 per cent or less, meaning that these households use a quarter or less of their household income to pay for the mortgage instalment,”

Just based on what Mr Lee said, does it mean that over 30 per cent of BTO flats are “not affordable” for households earning the median household income of S$8,400?

It is rather meaningless not to tell us what is the “price point”, at which 70 per cent of BTO flats were priced below, & 30 per cent were priced above.

As the “median” is half of the households —  it may arguably, be a somewhat meaningless “affordability” conclusion because it does not say anything about the 40, 30, 20 & 10 percentile of households who many find the BTO flats “not affordable”.

For illustrative purposes — at the 10th percentile of the “Average Monthly Household Income from Work (Including Employer CPF Contributions) Among Resident Employed Households By Deciles”, at an income of S$2,040, may find that say, 90 per cent of the BTO flats were “not affordable”, because using the much-cited benchmark of “affordability”, of 25 per cent of income for the monthly mortgage repayment for a 25-year HDB housing loan — means that they can only buy a flat priced at not more than S$152,385.

So, what percentage of the 3-room & bigger BTO flats were priced at less than S$152,385?

According to Property Guru’s website, the cheapest 3-room flat launched between 2019 to Nov 2022 is located at Sun Sails (Sembawang), priced at S$163,000.

Does it mean households below the 10th percentile can not even afford to buy a 3-room flat?

Also, how many years will it take for such a household to accumulate the required downpayment of $30,477 (20 per cent x $152,385) — about five years & 11 months?

And similarly, wouldn’t the 1st to the 9th percentile find it “not affordable”?

The fact that for the 1st time in the history of the Housing Development Board (HDB) — it recently started selling 3-room flats with a 50-year lease, instead of a 99-year lease, may arguably, be an indication of decreasing “affordability”.

Also, I understand that 2-room flexi unit flats for retirees (age 55 & above) can be purchased from as short a lease as 15 to 45 years.

Edit: Typo corrected on 40th percentile

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