Housing Affordability: Singapore Versus Shanghai
I have a colleague from China, sometimes we like to compare Singapore with China or vice-versa, this time we talked about housing price, I told him that I bought a 2-room resale flat for $250K, also told him the size is 46sqm, he paused for a bit, and told me if calculate by price per sqm, the price is about the same as in a first-tier city (一线城市) in China. Mine is $5434 per sqm, so he said Shanghai is about 25,000 Yuan ($5115) per sqm, but he stressed that it's much more expensive for Chinese.
He went on to explain that the average white collar worker in Shanghai earns about 8,000 Yuan ($1637) a month, and one house is usually 60sqm (he highlighted that sqm in China is smaller than Singapore, think the measuring method is different?), which should cost about 1,500,000 Yuan, that is
187.5 times the average worker's monthly income. He also mentioned that the average monthly income includes bonus. For my case, my monthly is $3480, it does not include bonus, so for a $250K house, it's about 71.83 times my monthly income and if I include my bonus, it will be much lower. He also mentioned that there is no such thing as government housing loan and the banks in China typically charge 6%+ interest per annum for housing loan, that is crazy, then I told him it's impossible for one person to be able to afford a house, he agreed and said usually a couple will buy together.
So assuming an average male worker and an average female worker buys a house together in China, their combined income would be 16,000 Yuan, and assume they bought a 1.5M Yuan house, it will be 93.75 times their income, still much higher than me who buys with a single income! But note that their house is bigger than mine, I'm not sure if they can choose a smaller one though, according to my colleague, 60sqm is the norm for couples.
Now let's talk about loan, in Shanghai, they can loan up to 70% of the housing price, max repayment period is 30 years, as for me, I can loan up to 90% via government loan i.e. HDB, max repayment period is 25 years.
70% of 1.5M Yuan is 1.05M Yuan, they need to cough up 0.45M Yuan cash or CPF (don't know what it's called there but they do have a system similar to our CPF).
90% of $250K is $225K, me is $25K cash or CPF.
And don't forget their interest rate is 6%+! And by the way, when couples in China buy a house, they usually borrow money from relatives or parents will chip in to help them with the down-payment. I know it's not a good comparison but this does give a rough idea of the housing affordability in Shanghai, it's crazy, I wonder how people there survive, if Singapore is stressful, then Shanghai is madness!
He went on to explain that the average white collar worker in Shanghai earns about 8,000 Yuan ($1637) a month, and one house is usually 60sqm (he highlighted that sqm in China is smaller than Singapore, think the measuring method is different?), which should cost about 1,500,000 Yuan, that is
187.5 times the average worker's monthly income. He also mentioned that the average monthly income includes bonus. For my case, my monthly is $3480, it does not include bonus, so for a $250K house, it's about 71.83 times my monthly income and if I include my bonus, it will be much lower. He also mentioned that there is no such thing as government housing loan and the banks in China typically charge 6%+ interest per annum for housing loan, that is crazy, then I told him it's impossible for one person to be able to afford a house, he agreed and said usually a couple will buy together.
So assuming an average male worker and an average female worker buys a house together in China, their combined income would be 16,000 Yuan, and assume they bought a 1.5M Yuan house, it will be 93.75 times their income, still much higher than me who buys with a single income! But note that their house is bigger than mine, I'm not sure if they can choose a smaller one though, according to my colleague, 60sqm is the norm for couples.
Now let's talk about loan, in Shanghai, they can loan up to 70% of the housing price, max repayment period is 30 years, as for me, I can loan up to 90% via government loan i.e. HDB, max repayment period is 25 years.
70% of 1.5M Yuan is 1.05M Yuan, they need to cough up 0.45M Yuan cash or CPF (don't know what it's called there but they do have a system similar to our CPF).
90% of $250K is $225K, me is $25K cash or CPF.
And don't forget their interest rate is 6%+! And by the way, when couples in China buy a house, they usually borrow money from relatives or parents will chip in to help them with the down-payment. I know it's not a good comparison but this does give a rough idea of the housing affordability in Shanghai, it's crazy, I wonder how people there survive, if Singapore is stressful, then Shanghai is madness!
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