Rise Private Home Ownership Among Those Under 35

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Prices of private resale homes up 0.9% in June, nearing record highSINGAPORE (EDGEPROP) – According to Lee Sze Teck, senior director of Huttons Asia’s data analytics department, there is a growing trend of younger buyers opting to purchase private condos as their first home. Huttons estimates that 30% of new private home buyers are aged 35 and below, compared to just 20% five years back. Lee explains that the appeal of private homes among youths is driven by the flexibility and fewer restrictions they offer, as compared to buying an HDB flat or Executive Condo (EC). Additionally, private homes offer higher potential gains from sale compared to HDB flats. According to data from 2009 to 2Q2024, private non-landed prices in the Outside Central Region (OCR) have increased by 149.1%, while HDB resale prices have only increased by 87.9%.AdvertisementAdvertisementIn 2023 and 2022, the Department of Statistics shows that the number of young (under 35) residents staying in private homes has risen steadily from 375,651 to 380,459. “The allure of private homes in terms of facilities, lifestyle, exclusivity, and investment opportunities is a strong appeal for young people,” says Christine Sun, chief researcher and strategist at OrangeTee Group. However, can young people afford to upgrade to a condo? According to Lee from Huttons, housing affordability against median household incomes has improved in the first half of 2024. With the median household income at $10,689 per month in 2023, Lee explains that the younger generation’s earning powers suggest that private housing is an achievable goal. Typically, young buyers who can afford a condo will have a budget of $1.2 million to $2 million, and Lee advises that they can purchase a two-bedroom unit. He believes that saving $10,000 to $20,000 per year for five years, together with CPF contributions, can cover part of the downpayment. However, Christine Sun from OrangeTee cautions against overspending on housing and underestimating other expenses such as children’s costs.Some people may have additional savings, receive financial aid from parents, or they could sell their existing flat at a good price. In that case, they have a greater chance of affording a private condo. Nonetheless, Sun cautions against overstretching one’s finances to purchase a home and urges buyers to be aware of other costs such as childcare fees and other essential expenditures. She stresses that owning a home is within reach if buyers remain within their means and avoid excessive debt. According to Huttons Asia’s Lee, with falling foreign investments into HDB resale, consolidation of 1Q2023 and the expected cooling measures, the overall sales value of resale non-landed homes could drop by 5% to 10% this year. However, he also expects the resale volume in 2023 to surpass the 10,000 transactions recorded in 2022. SINGAPORE (EDGEPROP) – Huttons Asia’s senior director of data analytics, Lee Sze Teck, has observed a growing trend among younger buyers opting for private condos as their first home. As compared to five years ago, Huttons’ estimates show that around 30% of new private home buyers are aged 35 and below. Lee attributes this to the flexibility and fewer restrictions offered by private homes, as opposed to HDB flats or Executive Condos (ECs).Aside from this, private homes also offer higher potential gains from sale compared to HDB flats, according to data from 2009 to 2Q2024. During this period, private non-landed prices in the Outside Central Region (OCR) increased by 149.1%, while HDB resale prices only saw an 87.9% increase.READ ALSO: Homeownership, desire to upgrade still strong among youths: ERA surveyFrom 2011, the Department of Statistics has been reporting a steady increase in the number of young (under 35) residents staying in private homes, with a recorded number of 380,459 in 2023 from 375,651 in 2022. According to Christine Sun, chief researcher and strategist at OrangeTee Group, the allure of private homes in terms of facilities, lifestyle, exclusivity and investment opportunities is a strong pull factor for young people. But the question remains, can young people afford to upgrade to a condo?Based on the first half of 2024, Lee from Huttons Asia explains that housing affordability against median household incomes has improved. With the monthly median household income at $10,689 in 2023, Lee highlights that the younger generation’s income levels suggest that buying a private home is an achievable goal. Typically, young buyers who are able to purchase condos have a budget of $1.2 million to $2 million, and Lee suggests that they could consider purchasing a two-bedroom unit. He adds that with annual savings of $10,000 to $20,000 for five years, in addition to CPF contributions, buyers may have enough to cover part of the downpayment.READ ALSO: Private housing rents to increase 10% in 2023, contract 5% in 2024: Huttons However, OrangeTee’s Sun cautions against overspending on housing and underestimating other costs, especially for those with children, who may have to factor in childcare expenses and other essential expenditures. Sun points out that some buyers may have additional savings, receive financial aid from their parents, or be able to sell their existing flat at a good price. In these cases, they stand a better chance of affording a private condo. She also stresses that it is crucial to remain within one’s financial means and avoid overstretching one’s finances. This will prevent excessive debt and financial strain. According to Lee from Huttons Asia, with the decline in foreign investments for HDB resale, the expected cooling measures and the consolidation of 1Q2023, the overall sales value of resale non-landed homes may drop by 5% to 10% this year. However, he also predicts that the resale volume in 2023 may exceed the 10,000 transactions recorded in 2022.