Does your salary match your housing/vehicle spend?
1) If you are a car owner, does your pay match your car ownership status? If you don’t have a car, how do you know whether you can afford one? In this article, Salary.sg proposes using $7,650 as an income guideline for car ownership in Singapore.
We all know that owning a car in Singapore is a luxury. A small saloon costs around $50k while a family MPV can easily set you back by $80k or more. Don’t forget you also need to pay for road tax, car insurance, servicing, petrol, ERP, parking fees, cleaning, grooming and what have you.
If your income is not high enough, it may be a stretch for you to fund the costs of owning that set of wheels in Singapore.
According to the Household Expenditure Survey (HES) report recently released by the Singapore Department of Statistics, only 38% of households here own a car.
From the popular Salary.sg household income comparison tool, we can find out that the top 38% highest earning households make more than $7,650/mth. Though this group of 38% may not be exactly the same as the car-owning 38%, we argue that this is the group that can well afford a car. If this group can’t afford a car, we don’t know who can.
Hence the $7,650 guideline.
So, if you and your spouse own a car but make a combined salary of less than $7,650 a month, it may be a wise thing to do your sums again.
2) Many people often wonder if they can afford to stay in private housing. There are various ways to find the answer. You can ask a bank, calculate your debt ratios, use our 7.6x guideline, or compare your income with the average income of your desired housing type – which is the main topic of this article.
The easy way is to ask your banker. But if you and your spouse are working professionals with stable incomes, your banker will most likely grant you the loan even if you will be overstretching yourselves to pay the loan installments. See how a couple got saddled with a property loan they can hardly afford.
To be safe, we recommend you carefully consider your condo purchase (or landed property purchase). Read our articles on debt ratios and 7.6x guideline, and do your sums properly. And with the recent release of the Household Expenditure Survey (HES) report by the Singapore Department of Statistics, there is one more way to confirm if you’re suited for a certain housing type.
According to the HES report, the average monthly household income of families staying in private housing is $17,795/mth.
Families staying in landed properties make an average of $20,427/mth, while those in private apartments (including condos) earn an average of $16,311/mth.
If you and your spouse earn far below these amounts, you have to at least be aware that you will be far below average.
If you stay in HDB or plan to buy a bigger HDB flat, here are the numbers for you to do the comparisons:
- 1- and 2-room HDB flats – average monthly household income is $1,186
- 3-room HDB flats – average monthly household income is $3,503
- 4-room HDB flats – average monthly household income is $5,114
- 5-room and Executive HDB flats (including maisonettes) – average monthly household income is $8,177
See also Leong Sze Hian’s observations on the HES report.
Sources and references: Salary.sg
