The affordability of new HDB flats has remained stable over the past decade or so, based on house price to income ratios. The average price of a resale HDB flat is more affordable than it was a decade ago.

Affordability can be calculated by dividing the price of a HDB flat by its annual income. The figure represents the number of years of salary the couple would need to spend to repay the price of their home. The figure represents the number of years of wages the couple would have to spend to repay the price of the home without the allowance.

The lower the house price to income ratio, the more affordable it is. The government has earlier stated that a home costing no more than five times the annual household income is an affordable level.

The analysis shows that university graduates buying four-bedroom or larger pre-purchased HDB flats have had a ratio of five or less for more than a decade.

In the mature market town of Toa Payoh, the house price to income ratio for four-bedroom pre-purchase HDB flats has recently declined slightly. In Ang Mo Kio, which is also a mature town, the ratio has increased significantly, implying that it is less affordable for the nationals.

Analysts explained that the proximity of HDB flat locations to adjacent facilities such as MRT stations is a major factor affecting the pricing of HDB flats.

Using the ratio of house price to median annual household income, we found that the ratio of house price to income for resale HDB flats of four bedrooms or larger peaked at 5.3 in 2013, before declining and rebounding after the outbreak, although it remained below 5.

While the overall house price to income ratio for the resale market is still at an affordable level, if we analyse the individual ratios for each of the 26 municipalities across the island, there is a gap between the ratios for mature and non-mature municipalities.

The analysis shows that the house price to income ratio for non-mature municipalities has remained stable over the past 20 years, ranging from 3.9 to 4.9 at the end of last year, which is an affordable level.

However, in the mature towns, the range was 4.1 to 8.3, with a wider range. Among them, resale of HDB flats in Kallang Whampoa reached 6.7 in the fourth quarter of last year, a record high. The Central Region also reached a high point last year.

Analysts say that the limited supply in these towns has led to an imbalance between supply and demand, thus pushing up prices. There is also no salary cap on the resale market, which attracts wealthier buyers to the market.

Analysts also believe that the prime HDB model may be effective in curbing speculation and could be explored as a replacement for the existing classification of established and non-established towns.