Issue 323

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 CONTENTS FROM THE

p2 Housing Affordability is More than Your

EDITOR
Welcome to the 323th edition of the
Singapore Property Weekly.
Salary The 3-3-5 Rule and My 4 Models
Hope you like it!
p8 Resale Property Transactions
Mr. Propwise
(July 24 July 28)

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 SINGAPORE PROPERTY WEEKLY Issue 323

Housing Affordability is More than Your Salary The

3-3-5 Rule and My 4 Models
By Property Soul (guest contributor)

Dollars and Sense recently published a blog

post titled Heres the salary you need to earn
to afford these homes in Singapore. The
writer of the article has the good intention to
show readers what type of housing they can
afford based on their monthly salary.
However, income is only part of the whole
picture when it comes to deciding whether
you can pay up for a property.

Housing affordability is not all about

income

When you apply for a housing loan, banks

usually ask for your latest payslips,

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 SINGAPORE PROPERTY WEEKLY Issue 323
account statement, tax assessment, CPF
contribution history, etc. The banks need to
make sure that borrowers are capable of
repaying their housing loan. This also serves
as a proof of income when calculating the
Total Debt Servicing Ratio (TDSR).
However, whether you can afford a particular
housing type cannot be entirely based on
your monthly salary. There are other
important factors to consider too, including:
1. How much cash and CPF you can use to
settle the deposit, legal fee, stamp duties,
renovation, etc.
2. How much you can set aside for mortgage
repayment after the deduction of your
monthly expenses.
3. How much contingency funds you have to
cope with interest rate hikes, negative equity,
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etc.
4. How stable your household income is (job
stability of both husband and/or wife).
5. When you purchase your property makes a
big difference in the loan-to-value, buyer and
seller stamp duties, etc.
Comparing Dollars and Sense Affordability
Table and 3-3-5 Rule
Back in June 2014, Yahoo News reposted an
article from my book No B.S. Guide to
Property Investment about my 3-3-5
affordability test. This has attracted tons of
comments and sparked off heated debates
online.
Let me briefly recap the 3-3-5 rule that is
meant to determine the affordability of the
property you intend to buy.
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 SINGAPORE PROPERTY WEEKLY Issue 323

Rule #1: 30% of property price The table below is a comparison between
Dollars & Senses Affordability Table and my
Your initial capital should at least be 30
3-3-5 rule.
percent of the propertys asking price, to pay
for the down payment, transaction costs and
other miscellaneous expenses.

Rule #2: 1/3 of monthly salary

Your monthly mortgage payment should not

exceed one-third of your monthly salary.

Rule #3: 5 times of annual income

The purchase price of the property cannot

exceed five times of your annual income.

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 SINGAPORE PROPERTY WEEKLY Issue 323
As you can see, if you earn the average
salary per spouse in Dollars & Senses table,
you fail rule #2 (repayment less than one-third
of monthly household income) in all types of
private housing. If Dollars & Senses average
housing price is accurate, prices of all
categories of housing are higher than 5 times
of annual household income which cant pass
rule #3.
Look before you leap and enter at your
own risk
Compared with the Dollars & Sense
Affordability Table, the 3-3-5 rule is no doubt
more conservative and stringent in
determining the affordability of a home buyer.
After all, buying a home is usually the biggest
purchase in a salarymans whole life. Its
better to be safe than sorry.
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Of course, if I were a property agent or a
developer, I would come up with a 1-2-10
rule. You will be relieved and happily hand me
your cheque for the deposit.
Rather than complaining that the 3-3-5 rule is
too strict and unrealistic, and that you will
never be able to buy your dream home in this
market, have you ever thought of the
fundamental issues here?
If you need to pay more than one-third of your
household income for your mortgage every
month, you are not having enough buffer for a
market downturn. If the housing price is
higher than five times of your annual
household income, you cant really afford it.
Either switch to a higher-paying job or settle
for a more affordable housing type.
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 SINGAPORE PROPERTY WEEKLY Issue 323
We are having the boiling frog phenomenon
here: When people are in a high-price
environment for too long, they will gradually
think that it is normal and acceptable to pay
high prices. Similarly, when people are in a
prolonged boom of the property market, they
will forget what a value-for-money home is,
or why it is necessary to calculate the ROI of
an investment property.
Affordability model for property investors
What about buying a private property for
investment rather than for your own stay?
Over the years, I have seen many investors
being burnt by their wrong or untimely
investment in the real estate market.
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So let me define affordability in four simple
categories:
1. Very Affordable
If the investment property is only one of your
many investments, and any time you have to
cut loss you dont even bat an eyelid; if you
can pay fully in cash or with a negligible loan,
the property is very affordable to you.
2. Highly Probable
If you can go through the 3-3-5 rule, and you
have reliable streams of passive income not
dependable on a pay cheque, your chance of
riding out the storm is highly probable.
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 SINGAPORE PROPERTY WEEKLY Issue 323

3. Merely Stretchable illiquid. Do you dare to take the plunge just

based on your current salary?
If you cant pass the 3-3-5 test, and after you
purchase the property, you must constantly By guest contributor Property Soul, a
worry about low rental, no tenant, interest successful property investor, blogger, and
rate hike, economic recession, job stability, author of the No B.S. Guide to Property
failing business, etc., you are merely Investment.
stretchable.

4. Barely Reachable

If you have difficulty even forking out 20

percent for the deposit, and your property
agent hints that theres a way to help, you
know that investing in a private property
based on your current savings and financial
situation is barely reachable.

Buying a property is different from buying

stocks. It is more complicated and highly

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 SINGAPORE PROPERTY WEEKLY Issue 323

Non-Landed Residential Resale Property Transactions for the Week of July 24 July 28

Postal Area Transacted Price Postal Area Transacted Price

Project Name Tenure Project Name Tenure
District (sqft) Price ($) ($ psf) District (sqft) Price ($) ($ psf)
1 MARINA BAY RESIDENCES 710 1,500,000 2,111 99 8 CLYDES RESIDENCE 1,668 1,500,800 900 FH
1 MARINA BAY RESIDENCES 732 1,460,000 1,995 99 9 THE PATERSON EDGE 990 2,350,000 2,373 FH
1 THE SAIL @ MARINA BAY 893 1,495,000 1,673 99 9 ONE DEVONSHIRE 1,496 3,380,000 2,259 FH
2 SKYSUITES@ANSON 667 1,303,900 1,954 99 9 MARTIN PLACE RESIDENCES 1,044 2,235,000 2,141 FH
3 TANGLIN VIEW 1,141 1,438,000 1,260 99 9 THE PATERSON 1,216 2,465,000 2,027 FH
3 PEARL BANK APARTMENT 1,755 1,530,000 872 99 9 THE COSMOPOLITAN 1,679 3,360,000 2,001 FH
4 SEASCAPE 4,069 9,000,000 2,212 99 9 ROBERTSON EDGE 474 888,000 1,875 999
4 SKYLINE RESIDENCES 1,475 2,840,000 1,926 FH 9 WATERMARK ROBERTSON QUAY 1,324 2,240,000 1,692 FH
4 SEASCAPE 2,174 3,800,000 1,748 99 9 ASPEN HEIGHTS 1,324 1,900,000 1,435 999
4 CORALS AT KEPPEL BAY 1,442 2,250,000 1,560 99 9 CAIRNHILL PLAZA 2,852 3,998,000 1,402 FH
4 SKYLINE RESIDENCES 1,475 2,240,000 1,519 FH 9 PACIFIC MANSION 1,528 1,920,000 1,256 FH
4 TURQUOISE 2,153 3,050,000 1,417 99 9 GRANGE HEIGHTS 2,713 3,400,000 1,253 FH
4 HARBOUR VIEW TOWERS 1,615 1,610,000 997 99 9 PACIFIC MANSION 1,528 1,810,000 1,184 FH
5 THE ROCHESTER 1,206 1,628,100 1,350 99 9 PACIFIC MANSION 1,528 1,710,000 1,119 FH
5 THE VISION 818 1,050,000 1,284 99 10 ARDMORE THREE 1,787 6,903,445 3,864 FH
5 THE PARC CONDOMINIUM 1,292 1,580,000 1,223 FH 10 ARDMORE PARK 2,885 8,800,000 3,051 FH
5 HERITAGE VIEW 969 1,168,000 1,206 99 10 GRAMERCY PARK 1,270 3,812,000 3,001 FH
5 THE PARC CONDOMINIUM 980 1,175,000 1,200 FH 10 TOMLINSON HEIGHTS 5,490 15,000,000 2,732 FH
5 THE VISION 1,259 1,480,000 1,175 99 10 TOMLINSON HEIGHTS 5,490 15,000,000 2,732 FH
5 DOVER PARKVIEW 1,249 1,300,000 1,041 99 10 GRAMERCY PARK 2,120 5,515,200 2,601 FH
5 TREASURE PLACE 2,174 2,180,000 1,003 FH 10 ST REGIS RESIDENCES SINGAPORE 2,120 4,500,000 2,122 999
5 MONTEREY PARK CONDOMINIUM 2,056 1,910,000 929 999 10 PARK HOUSE 1,572 2,800,000 1,782 FH
8 CITY SQUARE RESIDENCES 872 1,410,000 1,617 FH 10 DUCHESS RESIDENCES 1,464 2,600,000 1,776 999
8 KENTISH LODGE 1,216 1,230,000 1,011 99 10 RV SUITES 538 950,000 1,765 FH

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 SINGAPORE PROPERTY WEEKLY Issue 323

Postal Area Transacted Price Postal Area Transacted Price

Project Name Tenure Project Name Tenure
District (sqft) Price ($) ($ psf) District (sqft) Price ($) ($ psf)
10 ROBIN REGALIA 861 1,520,000 1,765 FH 15 FULCRUM 818 1,418,000 1,733 FH
10 LEEDON RESIDENCE 3,649 6,300,000 1,727 FH 15 FULCRUM 818 1,407,000 1,720 FH
10 ZENITH 775 1,300,000 1,677 999 15 MEYER RESIDENCE 1,152 1,850,000 1,606 FH
10 CASA JERVOIS 1,593 2,200,000 1,381 FH 15 THE LUSH 775 1,100,000 1,419 FH
10 D'LEEDON 3,175 4,363,000 1,374 99 15 COTE D'AZUR 1,302 1,775,000 1,363 99
10 EWE BOON REGENT 1,033 1,400,000 1,355 FH 15 COTE D'AZUR 1,389 1,780,000 1,282 99
10 SPRING GROVE 1,389 1,850,000 1,332 99 15 POSHGROVE EAST 1,238 1,550,000 1,252 FH
10 SPANISH VILLAGE 1,528 1,920,000 1,256 FH 15 BELLA CASITA 947 1,150,000 1,214 FH
10 THE TESSARINA 1,679 2,080,000 1,239 FH 15 SANCTUARY GREEN 1,023 1,176,450 1,150 99
11 26 NEWTON 474 1,248,327 2,636 FH 15 COSTA RHU 2,056 2,350,000 1,143 99
11 PARK INFINIA AT WEE NAM 1,001 1,890,000 1,888 FH 15 MOUNTBATTEN SUITES 1,044 1,100,000 1,054 FH
11 THE LINCOLN RESIDENCES 1,884 3,220,000 1,709 FH 15 ALPHA APARTMENTS 1,249 1,260,000 1,009 FH
11 THE LINCOLN RESIDENCES 1,841 3,000,000 1,630 FH 15 KATONG PARK TOWERS 1,475 1,450,000 983 99
11 EVELYN MANSIONS 829 1,318,000 1,590 FH 15 GEMINI APARTMENTS 1,270 1,230,000 968 FH
11 LUCIDA 1,324 1,750,000 1,322 FH 15 PALM OASIS 1,464 1,170,000 799 FH
11 NOVENA COURT 861 950,000 1,103 FH 16 RIVIERA RESIDENCES 1,216 1,508,888 1,241 FH
12 THE ABERDEEN 1,302 1,380,000 1,060 FH 16 THE SUMMIT 1,238 1,340,000 1,083 FH
12 CASA FORTUNA 1,076 1,140,000 1,059 FH 16 EASTERN LAGOON 980 990,000 1,011 FH
12 THE BELLEFORTE 1,335 1,393,000 1,044 FH 16 COUNTRY PARK CONDOMINIUM 1,711 1,721,000 1,006 FH
12 SKYSUITES17 2,928 2,750,000 939 FH 16 SUNHAVEN 1,066 955,000 896 FH
12 KIM KEAT LODGE 1,378 1,200,000 871 FH 16 THE BAYSHORE 1,227 1,020,000 831 99
14 D'WEAVE 570 750,000 1,315 FH 16 THE TANAMERA 1,518 1,180,000 777 99
14 LA BRISA 431 544,000 1,263 FH 16 BAYSHORE PARK 936 713,000 761 99
14 CASA AERATA 484 599,959 1,239 FH 17 PARC OLYMPIA 646 650,000 1,006 99
14 THE WATERINA 721 880,000 1,220 FH 18 SEA ESTA 1,367 1,315,000 962 99
14 SIMSVILLE 1,249 1,180,000 945 99 18 NV RESIDENCES 1,109 1,040,000 938 99
14 SIMSVILLE 1,238 1,140,000 921 99 18 SAVANNAH CONDOPARK 1,238 930,000 751 99

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 SINGAPORE PROPERTY WEEKLY Issue 323

Postal Area Transacted Price Postal Area Transacted Price

Project Name Tenure Project Name Tenure
District (sqft) Price ($) ($ psf) District (sqft) Price ($) ($ psf)
19 CASA CAMBIO 431 628,000 1,459 FH 22 PARC VISTA 1,055 840,000 796 99
19 KENSINGTON PARK CONDOMINIUM 1,668 1,833,000 1,099 999 23 MERA WOODS 1,938 1,990,000 1,027 999
19 KOVAN RESIDENCES 1,798 1,900,000 1,057 99 23 GLENDALE PARK 1,367 1,400,000 1,024 FH
19 PARC VERA 786 818,000 1,041 99 23 HAZEL PARK CONDOMINIUM 1,938 1,818,000 938 999
19 KOVAN RESIDENCES 1,442 1,500,000 1,040 99 23 GUILIN VIEW 1,281 1,070,000 835 99
19 BOATHOUSE RESIDENCES 732 755,000 1,031 99 23 THE JADE 1,335 1,100,000 824 99
19 BOATHOUSE RESIDENCES 1,119 1,145,000 1,023 99 23 MONTROSA 1,184 940,000 794 999
19 RIVERSOUND RESIDENCE 1,421 1,350,000 950 99 23 THE LINEAR 1,755 1,350,000 769 999
19 THE MORNING GLORY 1,033 930,000 900 FH 23 REGENT GROVE 1,163 815,000 701 99
19 RIVERSAILS 915 800,000 874 99 27 THE NAUTICAL 764 800,000 1,047 99
19 FLORENCE REGENCY 1,690 1,239,999 734 103 27 EIGHT COURTYARDS 861 820,000 952 99
19 COMPASS HEIGHTS 2,336 1,500,000 642 99 27 SEMBAWANG COTTAGE 1,884 1,170,000 621 FH
20 SKY HABITAT 1,292 1,885,000 1,459 99 28 SELETAR SPRINGS CONDOMINIUM 1,561 1,030,000 660 99
20 GOLDENHILL PARK CONDOMINIUM 1,335 1,820,000 1,364 FH
20 THOMSON GRAND 1,582 2,000,000 1,264 99
20 SEASONS VIEW 1,141 1,200,000 1,052 99
NOTE: This data only covers non-landed residential resale property
20 RAFFLESIA CONDOMINIUM 1,195 1,240,000 1,038 99 transactions with caveats lodged with the Singapore Land Authority.
20 SEASONS VIEW 1,141 1,150,000 1,008 99 Typically, caveats are lodged at least 2-3 weeks after a purchaser
21 MAPLE WOODS 1,324 1,800,000 1,360 FH signs an OTP, hence the lagged nature of the data.
21 THE STERLING 1,464 1,950,000 1,332 FH
21 THE CASCADIA 1,582 2,000,000 1,264 FH
21 GARDENVISTA 1,130 1,410,000 1,248 99
21 1 KING ALBERT PARK 1,281 1,580,000 1,233 FH
21 SIGNATURE PARK 1,399 1,660,000 1,186 FH
21 SIGNATURE PARK 1,055 1,125,000 1,066 FH
21 SYMPHONY HEIGHTS 1,539 1,600,000 1,039 FH
21 SYMPHONY HEIGHTS 990 1,025,000 1,035 FH

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