Have wages kept up with soaring HDB flat prices?

Any readers who can provide me with Singapore’s average household income since 1960’s or 1970’s, please email me: [email protected]

Written by Ng E-Jay
18 December 2009

An interesting statistic was revealed by the Straits Times in its article “Flat prices will rise but still be affordable” on Monday, 14 Dec.

As an example of how HDB flat prices have soared, a three-room flat in Queenstown in 1964 cost $6,200, but would fetch at least $200,000 today. This translates into a 32.3 times gain over a 45 year period, or around 8 percent compounded annually.

But have wages risen 8 percent annually over the same period?

According to the Singapore Department of Statistics website, the average household monthly income rose from $5,322 in 1997/98 to $7,440 in 2007/2008 at an average annual rate of only 3.4%.

Since 1990, average household monthly income has only risen at an average annual rate of around 5% compounded.

Specifically, for the past decade since the Asian Financial Crisis, wages for the working class have more or less stagnated due to the huge influx of foreign workers who are competing with them for jobs. Given that the large rise in property prices was concentrated in the past 10-15 years, it is safe to conclude that the purchasing power of working class Singapore citizens relative to HDB flat prices have declined significantly.

Wages before 1990 were presumably rising at a higher rate. But the lackluster performance of wages since 1990 can only mean that property prices have become more and more expensive relative to income.

Older generations of Singaporeans presumably can enjoy the windfalls of asset appreciation, but only to a limited extent. The large majority of Singapore citizens own only one home — the one they live in. They cannot monetize the full value of their property even if they have made a large paper profit.

Starting from 1 Mar 2009, the HDB has implemented a lease buyback scheme in which elderly owners of 3-room and smaller flats can sell the tail-end of the lease of their flats back to HDB. However, the catch is that most of the cash has to be ploughed back into a compulsory annuity administered by the CPF Board. Asset monetization effectively becomes asset confiscation.

Younger generations of Singaporeans not only have to deal with rising costs of basic necessities, but are also heavily burdened with large mortgages arising from having purchased expensive flats whose prices have risen much faster than total income.

And the Government calls this “having a stake in the nation”.

8 comments on Have wages kept up with soaring HDB flat prices?

  1. Did you calculate the rate of increment for the salary and perks of the MIW ? The very reason that they justify the afford-ability of the HDB could be that they are benchmarking the cost of HDB against those MIW .

  2. SIMPLE LOGIC (which any secondary student can understand):

    >> FACT: During our 1994-1996 Property Bull Run ( right under the very noses of our PAP Million-dollar Ministers !) prices of BOTH private and HDB properties were increasing at a whopping 30% per annum for THREE YEARS IN A ROW !!!

    >> TWO SIMPLE & PERTINENT QUESTIONS (which the same Muddled-headed Million-dollar Ministers WILL NOT or DARE NOT answer):

    (i) SINCE WHEN has Singapore’s economy (as well as its People’s salaries) grew at such a phenomenal rate of 30% per annum for three straight years ???

    (ii) Our astronomical property prices is REALLY due to “economic growth” (as proudly proclaimed by our Wise Minister Mentor Lee Kuan Yew) or ACTUALLY due to rampant “property speculation” (unchecked by an Impotent & Incompetent Million-dollar PAP Government) ???

  3. What I know when I read a book written about the PAP in the early years (sorry I forgot the book name, I read it at the Bedok Central Library); Lee Kuan Yew’s salary was officially stated at $3750/- per month in 1975.

    I was earning $1150/- per month in 1975.

    Today in 2009, LKY is earning 3.3 million dollars per annum, i.e. $275,000 per month.
    How can he justify such enormous increase, when the average S’porean salary increase is pittance.

    The only thing that qualify LKY to draw such high salary is his system of ‘legal corruption’ by drawing their own pay check and unconstitutional pay increase.

    Do we citizens has a say to such blatant atrocity?

  4. Singapore really needs a 101 revamp before Singaporeans get themselves totally trampled on by the PAP govt . Lets claim back our political rights as stakeholders.

  5. I am also mortified at the prices of SG houses.I recently applied for the queensway flat and according to my calculation, I have to pay for the house with half my pay for 25 years.Means I work to pay for a house I will be using just to sleep. What a life!!

    When will our pay ever rise!!!!

  6. Having lost our jobs to FT or FW or whatever, how are we going to keep ourselves alive, let alone a family without any income.

    In 2009, LKY is earning 3.3 million dollars per annum, i.e. $275,000 per month.

    If I have his annual earning of 3.3 million dollars for one time, I would be living comfortably for the rest of my life.

    Sadly I am earning zero dollars per annum now.

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