The Societal Pressure Of Owning A Property As A Young Singaporean

I do not know if it is a post-Covid thing, an age thing or a millennial thing - everybody around me is either looking to purchase their first property or already own one. And if you are in a committed relationship, there comes the next question: Are we going to BTO together, get a resale apartment, or go the private route? If we are going private, are we looking at leasehold or freehold? There are just so many things to consider.

In a fast-paced society like Singapore, it is all about achieving the next milestone in life. Young Singaporeans like myself are constantly facing a range of societal pressures that reflect the competitive environment and high expectations prevalent in this nation. They could range from academic achievements and career success to financial stability and, in this modern day and age, social media influence.

However, at the pinnacle of it all, I believe the greatest societal pressure that young Singaporeans face is owning a property. Homeownership in Singapore is like saying "I made it in life." While I believe that Singapore's real estate is a hot commodity and that property investment will never fail, the whole point of this article is to advise you not to conform to societal pressure, but rather, make informed decisions when it comes to owning a property.

Wise men say only fools rush in. Many Singaporean couples rush to apply for BTO as a way to "secure" the relationship or as soon as they are able to. However, "as soon as you are able to" does not equate to being financially ready. Some even are financially ready and capable but do not do anything because they miscalculated their finances. Hence, it is vital to engage a property salesperson who can provide backed-up advice.

Homeownership is a major commitment that can potentially wreck havoc to your lifestyle and finances should you prepare inadequately. Whether you are going the HDB or private route, adequate understanding of the current property market is vital.

Let us take a look at what it might cost you to own a home in Singapore, be it a HDB, condo, or landed property, in the past 10 years.

Source: PropNex Investment Suite

We can see that the prices of HDBs have more or less maintained the same over the past 10 years. However, the prices of condos and landed properties have risen exponentially. The average price of condos ($1,881,536) is 3.2 times higher than that of HDB apartments ($585,229), with landed properties ($5,635,991) being 9.6 times higher. That being said, we must note that the total number of landed properties is significantly lesser than condos and HDBs, and their sizes are significantly larger than other types of housings.

Now, some of you reading this might be thinking, "It seems like HDB is such an affordable route! Let's get an HDB!"

Consider your long-term plan

I am not saying that one is a better property choice than the other. You want to plan for the long-term. As mentioned earlier, homeownership is a commitment. If you are looking to purchase a property to live in, you will want to consider the masterplan for the estate you are looking at, your family members' needs, and how long you are intending to stay there. It is also vital to assess the loan package you can take. One general rule of thumb is that you should be able to comfortably set aside a budget of at least 40% of your monthly income to service your loan without having to make many sacrifices.

If you are looking to purchase a property as an investment, you can potentially generate more rental income than the loan repayment. Even if you are not able to cover the mortgage with your rental income, it still offsets a significant portion of your monthly repayment. Now, before you jump the gun, here comes the important part. There are several requirements if you are thinking of renting out your HDB. You must be a Singapore citizen in order to rent out the entire apartment. PRs, on the other hand, are only allowed to rent out individual bedrooms. In both situations, you must fulfil the minimum five years occupancy period. If you are thinking of renting out just the rooms, your apartment must be at least 3-room. Even then, you are to seek HDB's approval before going on with your plan. This is because there is a non-citizen rent out quota that HDB imposes.

If you own a private residence, whether condo or landed, you do not have to adhere to any of the requirements. You can do so whenever you want.

A recent survey conducted by PropNex revealed that nearly half of HDB homeowners want to trade up to a bigger property, of which more than half of this group wants to upgrade to a private residence.

Further research found that the group with the strongest inclination to upgrade to a bigger property are young Singaporeans aged 30 to 40 years old. With many in this age group active in investments, I can only assume that the reasons for such strong housing aspirations could stem from having adequate savings as well as the need to be able to accommodate lifestyle changes or their family.

I just want to put it out first that choosing a condo does not make you atas and living in an HDB does not mean you are poor. In fact, from the recent million-dollar HDB transactions that have been reported, we can see that there is a shift in dynamics in terms of homeowners.

PropNex states that the ideal budget for homeowners looking to upgrade from HDB to a private property for personal residence is approximately $1.6 million to $1.9 million. The same survey revealed a pretty shocking discrepancy in budget expectation.

A significant number of homeowners stated that the budget for their next home is less than $1 million. With that amount of budget, this group would not be able to afford a private condo. Just in the OCR, which is popular with HDB upgraders, the price of private condos averages at $1.8 million and $1.5 million for new launches and resales, respectively. Alternatively, the price of ECs averages at $1.6 million for new launches and $1.4 million for resales.

On the other hand, HDB resale has and will remain the affordable option for those who may have a tighter budget. At the end of the day, your choice of residence should be based on your needs and financial capacity. Also, with adequate planning of your finances, you would be surprised to know that condos are more affordable than you think.

You should only own a property when you are ready, and not just as another milestone to accomplish. That way, you can ensure you own your own place without living a life of regret. Lay out all your financial needs and life goals to see if you are able to afford a mortgage. Make sure that you have an adequate amount of savings. As mentioned at the start of the article, we have come across many individuals who have miscalculated their finances, thus believing that they are not able to commit to owning a property. This is why it is so important that you engage our property salesperson to get a better understanding of your true financials to get a clearer picture of your true capabilities. That being said, owning a property as a young Singaporean does come with some benefits, such as getting a longer loan tenure as well as being able to complete paying your mortgage at an earlier age.

So, back to the question I asked at the start: Do you feel that it is necessary to own your own home as a Singaporean? At the end of the day, buying a property is not about necessity and should not be led by societal pressure. Your home is yours and yours alone, and it is vital to remember that owning a property should reflect your personal decisions, not societal pressure. But for some, owning a piece of real estate is just another milestone in their journey towards financial freedom. However, your home should be a sanctuary that aligns with your lifestyle and values, not a decision driven by external expectations.

Whether you choose to continue living with your family, rent, or purchase your own home, you should make decisions that support your well-being and happiness. Each one's journey is unique and there is no one-size-fits-all path to homeownership.

Read about what other HDB flat owners feel about upgrading and buying a property in 2024 in PropNex Research's latest survey report here!