I shall quote from this blog
http://jeremy-chen.org/blog/201309/affordability-hdb-flats-then-and-now
"We can see that in 1980, the price of a 3-room HDB flat in Queenstown is $20,000. The salary of a factory operator was $500 a month or $6,000 a year then. Going by the Price-to-Income ratio, the price of 3-room flat in Queenstown then was 3.33 times of annual salary of a factory operator. At ratio less than 5, it is considered quite affordable to buy the flat.
By 2013, 33 years later, the price of a 3-room HDB flat in Queenstown has risen to $335,000 while the salary of a factory operator is only $1,100 a month or $13,200 a year. The Price-to-Income ratio in this case is calculated to be 25.4, grossly unaffordable to a factory operator.
Indeed, in the last 33 years since 1980, the salary of an operator goes up roughly 2 times ($500 to $1,100) while a 3 room flat in Queenstown goes up 17 times ($20,000 to $335,000)!"
On reading it, I had a sense that the PAP smear brigade would might react by making hay about "improper comparisons" and that housing prices have remained affordable and that "oppies" thrive on "misinforming the public" and "misrepresenting the data". But the truth is, Leong and Han essentially have it. Let me add my two or three cents to sharpen the analysis and strengthen their conclusion.
Firstly, they might have compared 1980 Queenstown three room flats with three room flats in new towns like Punggol. This avoids the "Queenstown was not a mature estate back then, but it is now" criticism. So let's do that. Consider the numbers for the March 2013 BTO. In Seng Kang, a 3-room flat costs at least $160k. Maxing out on grants, it becomes $100k+++. So the minimum ratio is about 7.6. In practice it will cost quite a bit more (as all Singaporeans know "+++" suggests), but the ballpark is around there.
What we observe is that the deterioration of affordability is indeed very bad: from a price to annual income ratio of 3.3 to about 7.6. This is certainly not as horrifying as having it go to 25.4, but seriously, once you get to 10, you're sort of numb to any further increase anyway. But what does all of this mean operationally. Let me provide an interest-free approximation. A ratio of 3.3 means repayment of just over 16 years with monthly payments of 20% gross salary. With a ratio of 7.6, that means 37 years on 20%, 30 years on 25%, and 25 years on 30%. The numbers suggest "out of reasonable reach".
