What house should I be buying?

I had a conversation with my aunty and grandma tonight. My aunty told me that my parents bought our first house at $100,000 around 30 years ago. My grandma said she bought hers for $6,000, probably 60 years ago.

The prices seem really low, compared to the cheapest BTO flat nowadays at around $300,000. However, it could also be that wages were low last time.

A question popped up in my mind. Given today's wages and housing prices, what house should one go for?

To me, a house is a place to stay in. I don't view it as an investment. Thus, I want a house where I can make loan mortgages with no fuss.

As most people have employment fears around the age of 40, I want my housing loan to be settled by then. Assuming a person starts working at age 25, the mortgage period will be 15 years. I will want my entire house to be paid via CPF.

I assume a median pay of $3,000. This translates into a monthly Ordinary Account contribution of $690 from ages 25 to 35, and $630 from 35 to 40. CPF rates are 23% and 21% taken from the CPF website. I also assume that your spouse has the same pay and contribution, which tallies up to $1,380 a month.

Now we know how much monthly mortgage we can afford to pay, let's see what house is suitable by working backwards. According to the CPF mortgage calculator, a loan of $200,000 will a give monthly mortgage of $1,344.

As $200,000 corresponds to the loan amount excluding the downpayment of 20%, the full value of the house should be $250,000. By taking a look at the BTO prices via the HDB website, this hypothetical couple should be fairly okay with a 3-room flat in a non-mature estate, and a 3-room flat in a mature estate.

I'm not a pro-government person, but I honestly think that this is reasonably within reach of the median person in Singapore.
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