Can I afford a condo in Singapore as a Single ?
Hi, I am a Single, age 35.
Is earning $x,000 per month.
And have got the following cash and cpf savings on hand.
Like to know if I can afford my first condo.
If you are a Single with a decent career and foresee healthy progression in your pay grade. This is a question that will eventually come to mind, if it hasn’t already surfaced.
Without beating around the bush, let’s tackle this question head on.
As a sidenote, if you are a Single age 35 and below and is wondering if should purchase a condo before your turn 35, check out the article link inline.
Quick Intro – Decoupling Expertise
Before committing the next 5 mins to reading this article. It helps to know who’s behind the pen.
We are Decoupling Expertise, a real estate consultancy built with the singular focus of helping Singles purchase their 1st condo.
Just like a noodle store that only sells wanton noodles and nothing else. We are relentless in staying focused on helping Singles own private condos with investment potential.
Drop us a whatsapp text if you need help getting started on your first-condo plan.
Breaking affordability down into chunks
Let’s proceed to break the broad topic of Singles condo affordability down into digestible chunks.
To determine if you can afford your first condo, you must cross the following hurdles.
- #1 – Do you have enough cash and cpf savings to overcome the initial deposit and transaction cost involved in purchasing the condo?
- #2 – Based on your gross monthly salary, are you eligible to take up the bank loan required to fund your condo purchase ?
- #3 – Post purchase, can you comfortably handle the recurring monthly obligation of supporting a condo ?
First, what’s the average price of a condo in Singapore ?
Let’s hone in on our target and get a gauge of the average price of one bedroom and two bedroom condos in Singapore.
One bedroom condos or Studio apartments are the go-to entry level option for Singles first condo purchase.
We included two bedroom condo prices as a consideration for Singles with a little more budget to spare.
Two bedroom condos provide more options for Singles. You will be able to rent out the additional room to housemates, you will have additional room to house a partner or a pet.
| Location | Price Range (1 bedroom condo) | Price Range (2 bedroom condo) |
| CCR | $800,000 to $1,200,000 | $990,000 to $2,100,000 |
| RCR | $700,000 to $1,100,000 | $1,200,000 to $1,800,000 |
| OCR | $700,000 to $1,000,000 | $1,100,000 to $1,300,000 |
Next, let’s work out the cost involved in buying and maintaining a condo in Singapore
With prices in check, let’s address the initial start up cost associated with purchasing a condo in Singapore.
#1 – Start up cost – all the cost you need to foot upfront
The next three sections, details all the one off start up costs to be accounted for when purchasing your first condo.
Initial deposits
The basic structure of financing a condo purchase, comprises of 3 components.
Initial deposits
- 5% mandatory cash down payment
- 20% cash or cpf
Remaining – bank loan financed
- 75% private bank loan, subjected to your loan eligibility based on gross monthly income
*Any shortfall in bank loan due to loan eligibility has to be covered with either cash or cpf, we will dive deeper into the topic of loan eligibility in later section.
Let’s work through the calculation with the assumption of purchasing a one bedroom condo, priced at $1.1 mil.
| Property Price | 1,100,000 |
| Cash (5% mandatory, minimum cash requirement) | 55,000 |
| Cash or CPF (20%) | 220,000 |
| Loan (75%, subjected to your loan eligibility) | 825,000 |
Cost of transaction
So here’s the thing, aside from the cost of financing the condo itself, you will have to account for the transactional cost involved.
At a high level, transactional cost involved in purchasing a condo includes, buyer stamp duty, legal conveyancing fee and valuation fee.
Buyer stamp duty
Buyer stamp duty is a tax levied by IRAS, it is levied on the buyer whenever a real estate purchase transaction is being made.
The tax rate for buyer stamp duty is as follows.
| Buyer stamp duty – based on valuation or purchase price of property (whichever is higher) | Rate (%) |
| First S$180,000 | 1% |
| Next S$180,000 | 2% |
| Next S$640,000 | 3% |
| Next S$500,000 | 4% |
| Next S$1.5 million | 5% |
| Remaining amount | 6% |
Referencing the similar example of purchasing a one bedroom condo, priced at $1.1 mil.
The buyer stamp duty will amount to $28,600.
Legal Fee
To legitimise the purchase of your condo, you will need a conveyancing lawyer to administer the transaction. The lawyer will assist you in formalising your mortgage and administer the flow of funds between you and the seller of the property.
Legal fee for a private condo will amount to $3,000.
Valuation Fee
As part of securing a mortgage for your new property, the bank will require an external valuer to condo a valuation on your property.
The valuation fee will amount to $600.
Agent Fee
When purchasing a resale HDB, buyers will normally need to pay 1% commission to the property agent representing the buyer. For a private condo, no commission is required, your agent will be receiving a co-broker commission from the agent representing the seller.
In this case, the agent fee will amount to $0.
Cost of renovation and furnishing
The third start up cost component that should not be overlooked, is factoring in the cost of renovation and furnishing.
Cost of renovation
First off the cost of renovating a one bedroom should not be hefty, when compared to renovating a larger 3 bedroom resale HDB.
But it varies widely depending on the “newness” of your property and the amount of interior design work you want to put into the property.
Generally the amount spent on a new one bedroom condo should be alot lesser than an older condo development.
Common renovation work includes, reworking flooring, re-painting walls, installation of cabinets and basic carpentry work. More costly renovation includes, building of loft, rectification of partition.
Let’s peg it at $30,000 as an estimate to renovate a one bedroom condo.
Cost of furnishing
Aside from renovation, you will also need to include costs related to purchase of electrical appliances like fridge, microwave, tv. And purchase of furniture like sofa, bed frame and mattress.
Let’s allocate a $10,000 cost to this.
Summary of startup cost / funds required to purchase condo
Ok, now that we have cleared all the startup costs related to purchasing a condo, let’s take stock and summarise the total startup cost required to purchase your first condo.
This determines the amount of cash and CPF savings that you need on hand to purchase a condo.
Referencing the table below, we simulated the amount of cash and cpf savings you need to purchase a condo at 4 different price points.
| Price of Condo | 900,000 | 1,000,000 | 1,100,000 | 1,200,000 |
| Funds to finance purchase of condo | ||||
| Mandatory Cash (5%) | 45,000 | 50,000 | 55,000 | 60,000 |
| Cash or CPF (20%) | 180,000 | 200,000 | 220,000 | 240,000 |
| Loan (75%) | 675,000 | 750,000 | 825,000 | 900,000 |
| Transactional Cost | ||||
| Buyer stamp duty | 21,600 | 24,600 | 28,600 | 32,600 |
| Legal Fee | 3,000 | 3,000 | 3,000 | 3,000 |
| Valuation Fee | 600 | 600 | 600 | 600 |
| Agent Fee | 0 | 0 | 0 | 0 |
| Cost of renovation and furnishing | ||||
| Renovation | 30,000 | 30,000 | 30,000 | 30,000 |
| Furniture and electrical appliances | 10,000 | 10,000 | 10,000 | 10,000 |
| Total Cash Requirement | 85,000 | 90,000 | 95,000 | 100,000 |
| Total Cash or CPF Requirement (all cost that can be funded by cash or cpf) | 204,600 | 227,600 | 251,600 | 275,600 |
| Total Loan Requirement | 675,000 | 750,000 | 825,000 | 900,000 |
#2 – Bank loan – are you eligible to take up the loan required to fund your property ?
To afford a condo in Singapore, you must not also have the savings to fund the initial deposits and transactional cost.
You must also qualify for the loan quantum that is required to fund your property purchase.
To determine your maximum loan quantum, the bank will be assessing your gross monthly income against the total debt servicing ratio (TDSR) in the background.
What is TDSR ?
The TDSR limit is a limit set by the monetary authority of singapore (MAS), its goal is to ensure that property buyers do not over leverage when purchasing their property.
It stipulates that your monthly recurring debt obligation must not exceed 55% of your total gross monthly incomes.
Your monthly recurring debt obligation includes, minimum credit card repayment, car loan, student loan and in this case housing mortgage.
Your monthly gross income includes your salary and any declared source of income. As a side note, for variable or commission based income, a 30% haircut is to be applied on the gross income.
What happens if your max loan quantum falls short ?
Under a situation whereby your maximum loan quantum fall short of the loan quantum required to fund your property purchase, you would need to cover the shortfall with additional cash or cpf savings on top of the initial deposits highlighted above.
1 Click TDSR Assessment
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How much must you earn to qualify for the loan required to fund your condo ?
To determine the minimum salary requirement to be eligible for different loan quantums. Let;s reuse the examples above and account for the different salary required to be eligible for the loan quantums required for funding condos at 4 different price points.
Assumptions
- Age 35
- Only recurring loan is a $500 credit card minimum required payment every month
- No car loan or another other loan
| Price of Condo | 900,000 | 1,000,000 | 1,100,000 | 1,200,000 |
| Loan Quantum (75% of property price) | 675,000 | 750,000 | 825,000 | 900,000 |
| Minimum Salary Requirement (to qualify for loan) | 6,800 | 7,500 | 8,100 | 8,800 |
#3 – Recurring cost to maintain your condo per month
Condo affordability in Singapore comes in 3 levels, clearing the first two levels of initial cash and cpf requirement and loan eligibility, leaving you with the 3rd level.
Can your monthly income adequately sustain the recurring cost of maintaining a condo ?
In the next couple of sections, let’s run through all the recurring cost components associated with owning a condo and map that back to some salary benchmarks at the end.
Monthly Mortgage
Amongst all the recurring cost of maintaining the condo, it is no surprise that mortgage is the biggest component. Monthly mortgages can be financed with both CPF and cash, so both your employer and your monthly CPF contribution can be put to work helping you pay monthly mortgages.
In similar fashion, we have simulated the different monthly mortgage amounts to be paid for the 4 different condo price points.
Assumptions as follows.
- 25 year loan tenure
- 3% Interest rate
| Price of Condo | 900,000 | 1,000,000 | 1,100,000 | 1,200,000 |
| Loan Quantum (75% of property price) | 675,000 | 750,000 | 825,000 | 900,000 |
| Monthly Mortgage | 3,201 | 2,557 | 3,912 | 4,268 |
Side note on loan tenure – MAS LTV guidelines
For a full 75% loan on property value, loan tenure must not exceed 30 years or loan period must not extend beyond borrower’s age of 65 years old.
Example if you are Single, age 35.
Considering a 30 year loan tenure, you are able to take up the upper limit of 75% loan to value ratio. Because..
- Your loan tenure did not exceed 30 years
- Your loan tenure (30 years) plus your age (35), did not exceed 65 years
But if you are Single, age 40.
Your maximum loan tenure can only be 25 years. Because, your loan tenure plus your current age must not exceed 65 years, in this case it will be your age (40 years) + maximum loan tenure (20 years).
Property Tax
Another recurring cost that needs to be accounted for is property tax. Property tax is to be levied based on the annual value of your property.
Annual value refers to the estimated gross annual rental income of a property less expenses to be incurred to facilitate rental, eg. cost of furnishing, maintenance fee etc.
Assuming if you were to live in the property purchased, it will be charged based on the owner occupied property tax rate.
Below we simulated the property tax expense for a one bedroom condo with average annual value of $54,000 ($4,500 monthly rental x 12)
| Estimated monthly rent | 4,500 |
| Estimated Annual Value | 54,000 |
| Yearly Property Tax | 2,880 |
| Monthly Property Tax | 240 |
Other cost associated with maintaining condo
We will use this section to account for all other cost required to maintain a condo, accounting for condo maintenance fee, utilities, internet and we throw in a budget for cleaning services as well.
| Cost of maintaining condo | Monthly Cost ($) |
| Condo maintenance fee | 300 |
| Utilities | 100 |
| Internet | 50 |
| Cleaning | 50 |
| Total | 500 |
Summary – recurring cost
Having touched on all recurring costs, here’s a summary for recurring cost across condo of 4 different price points.
| Price of Condo | 900,000 | 1,000,000 | 1,100,000 | 1,200,000 |
| Monthly Mortgage | 3,201 | 2,557 | 3,912 | 4,268 |
| Monthly Property Tax | 240 | 240 | 240 | 240 |
| Monthly cost of maintaining condo | 500 | 500 | 500 | 500 |
| Total Monthly Recurring Cost | 3,941 | 3,297 | 4,652 | 5,008 |
So how much must you earn monthly in order to afford a condo ?
Now back to the big question, how much do you need to earn in order to afford a condo. We summarised in the table below.
1) The salary you need to earn monthly to afford a condo of different price points, based on loan eligibility.
2) And account for remaining disposable income you are left with after deducting the monthly cost of maintaining the condo.
This effectively puts you in the driver seat, allowing you to explore if you can really afford a condo based on your current salary range.
| Price of Condo | 900,000 | 1,000,000 | 1,100,000 | 1,200,000 |
| Minimum Salary Requirement (to qualify for loan) | 6,800 | 7,500 | 8,100 | 8,800 |
| Less Monthly Recurring Cost | 3,941 | 3,297 | 4,652 | 5,008 |
| Monthly disposable income after maintaining condo | 2,859 | 4,203 | 3,448 | 3,792 |
How much to save in order to afford ?
Aside from accounting for the basic funds you need to overcome initial deposit and cost of transactions. Let’s throw in a 6 month contingency budget for maintaining the condo, just in case your source of income gets jeopardised.
| Price of Condo | 900,000 | 1,000,000 | 1,100,000 | 1,200,000 |
| Total Cash Requirement | 85,000 | 90,000 | 95,000 | 100,000 |
| Total Cash or CPF Requirement (all cost that can be funded by cash or cpf) | 204,600 | 227,600 | 251,600 | 275,600 |
| Plus Contingency fund – 6 months cost of maintaining condo | 23,646 | 19,779 | 27,913 | 30,047 |
| Total Cash Requirement Including Emergency Fund | 108,646 | 109,779 | 122,913 | 130,047 |
What’s next – Turnkey solution to put thoughts into action
This article is 10 pages long, I was panting psychologically as I put the last word to this article. But your effort to put thoughts into action could be way easier.
That’s why we created Decoupling Expertise.
Our goal is to provide a fuzz free turnkey solution to help Singles purchase their first condo.
Stating upfront, there are no fees involved in our consulting services. We earn our keeps by taking a “co-broke” commission from the seller of the property that you purchase. So there is really no cost on your side.
Our suite of consulting service include
Singles home finances
- Singles budget and affordability calculation
- Helping Singles in IPA application
- Helping Singles overcome loan eligibility challenges
- Loan package comparison and advisory for Singles
Singles real estate strategy
- Property research and shortlisting
- Location selection
- Unit type selection
- Layout review for unit selected
- Negotiation and purchase of unit
Singles real estate planning
- HDB or private condo consideration
- Boutique condo or mainstream development consideration
- Solo purchase or joint purchase with other Singles
- First property flip strategy
- Second property flip strategy
Feel free to drop us a text for whatsapp chat. No sales obligation, promised 🤞
