Graduate Salary increase must catch up with property prices

It did not come as a surprise that the median monthly salary of graduate for 2017 was $3,400 up from $3,300 in 2016. Why am I not surprised?

I see a correlation between property prices and salary of graduates. As property price increases, how can a fresh graduate afford to own one if his salary stagnates?

When I graduated in 1981, my starting salary was $950 per month with honours degree. Now a NTU Accountancy honours graduate earns $3,000 gross per month. The HUDC unit I stayed cost me $170,000 ($110 per square feet). Now an Executive Condominium costs an average $700 to $800 per square feet. Based on same floor area (1,500 square feet), the EC costs $1,050,000 to $1,200,000!

The ratio of Property Price to Starting Salary in 1981 was 178. Now the ratio is 350, nearly two times increase some 37 years later.

With current starting salaries of graduates, it is tough to own a private or semi-private property. The aspiration is getting harder to fulfil as the years go by. The realistic option is to own a flat from HDB. In land scarce Singapore and cost of modern living going up, naturally salary of graduates and workers have to go up to catch up.

© 2018, Lim Kim Tong for Living Investment

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3 Responses to Graduate Salary increase must catch up with property prices

  1. Sinkie says:

    Actually for most graduates, affording an EC is not too hard these days. With good honours degree, starting pay in civil service or MNCs ranges from $3.5K to $4K on average. After just 3 years on the job, salary will be $5+K to $6+K, or even higher for good performers.

    With most EC units around $800K to $1M, most graduate couples can afford to make the payments. The key criteria is that both have good degrees, work in large organisations, and drawing good income.

    With a $1M EC and $10K combined income, the property:income ratio is only 100.

    Those aiming for early financial independence can even just go for 4-rm BTO at $350K.

  2. abetterman21 says:

    Agree that wages haven’t caught up as compared to property prices. Hdb flats are probably the only way for the new adults to have a home unless there is a big break for some of these guys. Thanks for sharing.

  3. Cupcake says:

    Yes totally agree! Coming from someone who is about to graduate in a few months time. The idea of owning an EC within 5 years after graduation seems a little too far fetched. Getting a 4 room BTO would be a more practical and realistic choice. Surely, I wouldn’t want to be heavy in debt having to pay off the mortgage loans for the next 20 – 30 years of my life just to live in an EC.

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