In Singapore, a dream home is within reach for millennials – but the wait may be long

Construction delays of Build-To-Order flats have shifted part of demand to Housing Board resale market, where prices hit record high in the third quarter of 2021.

Curtains – instead of walls – separate their living and sleeping areas. Their baby who sleeps in a cot at the foot of their bed near the main door often gets awakened by noises outside the door. But it is the only safe spot away from the electrical sockets and the kitchen.

This L-shaped one-room Housing Board (HDB) rental flat in Sembawang is not where homemaker Azwa Abdullah, 23, and her security analyst husband Syazryl Abdullah, 24, imagined would be their first home.

But after getting hitched last June, and with their four-room Build-To-Order (BTO) flat in Bukit Batok slated for completion only in the third quarter of 2026, this 36 m sq space they have been living in for the past 1.5 years will have to do for now.

“It’s squeezy but we have no choice so we’ll have to make it work,” she said.

Ms Azwa Abdullah, a stay-at-home mother with her 9-month old baby Isya Ayra, and her husband Mr Syazryl Abdullah, a security specialist analyst in their one-room HDB rental flat in Sembawang. ST PHOTO: SAMUEL ANG

The couple pays around $240 a month in rent to the HDB under the Public Rental Scheme.

They are among the young Singaporeans who have had to adapt or re-evaluate their existing living arrangements due to housing-related challenges, which are exacerbated by the Covid-19 pandemic.

Many are dealing with a longer wait for BTO flats, rising HDB resale flat prices, and the mounting pressures of different generations living under one roof in a work-from-home norm.

Construction delays of BTO flats – the most affordable housing option for Singaporeans – due to a manpower crunch and supply shortages have shifted part of the demand to the HDB resale market, where flat prices hit a record high in the third quarter of this year and are poised to end on a high note.

Prices of private properties have also been on the rise.

Ms Azwa and her husband briefly considered buying a HDB resale flat to satisfy their immediate housing need but were put off by the high prices.

“With a baby, we really don’t have an extra $30,000 to pay for the cash over valuation that sellers are asking for these days. So we decided to go for a fresh flat at a subsidised price, even though it’s going to be a long wait,” said Ms Azwa, who is in the midst of appealing to HDB to move them to a bigger two-room rental flat when their contract is up.

Ms Azwa Abdullah and her husband Mr Syazryl Abdullah briefly considered buying a HDB resale flat to satisfy their immediate housing need but were put off by the high prices. ST PHOTO: SAMUEL ANG

The dilemma of having to choose to wait a longer time for a BTO flat or forking out more money on the HDB resale or private market has “far-reaching implications” on social issues such as family formation and financial adequacy, said Singapore University of Social Sciences economics associate professor Walter Theseira.

“Frankly, going to the HDB resale market will set a young couple back financially by a few years at least, in terms of losing out on some of the subsidies they would enjoy as a BTO purchaser.

“So the ones who are able to consider that choice realistically, would be ones with family wealth, whose parents can chip in and make up the difference that losing the BTO market subsidy offers,” said Prof Theseira.

Professor Sing Tien Foo, director of the Institute of Real Estate and Urban Studies at the National University of Singapore (NUS), noted that the average housing price to income ratio of 4.1 of four- to five-room BTO flats in the past 20 years from 2001 to 2020 is “within a reasonable range of affordability”.

The ratio is even lower if HDB housing grants, which gives eligible BTO home buyers up to $80,000 in grants, are taken into account, he said.

However, Prof Sing noted that the ratio is higher in bigger flats and mature estates such as Telok Blangah.

Prof Theseira added that there is a “certain level of dissonance” between the Government’s efforts to keep public housing, especially BTO flats, affordable and how prospective home owners perceive affordability.

“The Government may be right in saying that BTO flats in non-mature areas continue to be affordable, but the prospective home owner may also be right in saying that what their parents could have afforded on a similar income 30 years ago in the central region is no longer affordable to them today,” said Prof Theseira.

“I do have the feeling at times that policymakers and homebuyers are talking across each other when discussing housing affordability. Nobody is saying anything untrue, but there are different aspects of the facts that each side is more concerned with,” he added.

Hearing about properties in prime areas being valued and bought at record-breaking sums “might temper expectations somewhat”, Prof Theseira said.

“But I think it also unfortunately makes people feel that there’s some part of the Singapore dream that is not within their reach.”

To address this grievance, the Government introduced a prime location public housing (PLH) model that kicked off with a BTO project in Rochor last month.

Through stricter home ownership conditions, it aims to keep future HDB flats built in the city centre in central Singapore and the future Greater Southern Waterfront affordable and inclusive for Singaporeans, both at the initial purchase and at subsequent resales on the open market.

The Rochor project saw strong demand, with more than 10 applicants vying for each of the four-room flats at the close of the sales exercise last month, reflecting Singaporeans’ desire to live in a central area despite the various restrictions.

While the disruption from the pandemic may have caused some would-be BTO buyers to shift to the HDB resale or private market as an alternative option, the rising prices in both markets may “put a brake on the decision to move”, said Prof Sing.

“If the price gap between BTO and resale flats widens, people will still find BTO flats to be the preferred option despite the wait,” he said.

Some young families are also beset with uncertainties caused by long delays in getting their new flats.

Before the pandemic, the waiting time for a standard BTO flat was around three to four years.

It is now between four to five years – or even longer, for a small number of projects.

Demand for interim housing has also risen in tandem with longer BTO waiting time, with the number of applicants for rental flats under the HDB’s Parenthood Provisional Housing Scheme (PPHS) doubling in 2020 compared with 2019.

In August, HDB announced an additional 800 such flats in August, on top of the existing 840 units, and stricter eligibility criteria.

Only households with a combined monthly income of not more than $7,000, which is reflected at the point of sale application for the BTO flat, are able to apply for these PPHS flats which are allocated by ballot.

Rents range from $400 for a two-room flat in Marsiling, $600 for a three-roomer in Hougang and $1,500 for a four-room unit in Tiong Bahru.

Information technology manager Putri Yeo, 28, and her husband are among those who had to turn to the private rental market after the PPHS criteria change. Prior to that, they had applied unsuccessfully eight times.

After their wedding in July last year, the couple had initially moved into Ms Yeo’s bedroom in her family flat, but soon realised that it was too cramped to accommodate both of them as they are working from home.

They are now renting a 50 sq m studio apartment in Seletar for around $1,800 a month as they wait for their BTO flat in Kallang/Whampoa, which is estimated to be ready in 2024.

“Our rent now is double from our previous budget. We can still afford it but we have to be more careful with our daily spending,” said Ms Yeo.

Space constraints and frictions arising from different generations living under one roof in a work-from-home norm and space constraints have also spurred some young Singaporeans to hasten the move out of their family homes, even without first purchasing a home.

Architectural associate Christopher Wicks, 28, said moving out of his family home two months ago to a co-living space was “one of the best decisions” he has made for himself, despite the rent eating into his future home-buying budget.

“I’d been planning to move out since before Covid-19 and I even drew up a spreadsheet to budget my finances before I made the move, so I know I can sustain this for at least the next year or two while I figure out my long-term housing plan,” said the Singaporean, who is single.

Architectural associate Mr Christopher Wicks shares a six-bedroom walk-up unit in River Valley. ST PHOTO: GIN TAY

“No monetary value can compensate for the psychological euphoria of living on your own,” he added.

He pays $750 a month, excluding utilities, which is just under one-fifth of his salary, for a room in a six-bedroom walk-up apartment in River Valley rented from Singapore-based co-living operator Cove.

Cove’s co-founder Sophie Jokelson said the company has seen a significant increase in local demand for a co-living space, with Singaporeans and permanent residents making up at least 35 per cent of their tenants as at June this year. Singles make up 88 per cent of their tenants.

NUS real estate adjunct associate professor Steven Choo said renting, whether it is to wait for a BTO flat or to escape the tensions of living with parents, is ultimately seen as a stop-gap measure by most Singaporeans.

“Only a small percentage of Singaporeans will want to rent as a permanent solution. Renting is an attractive temporary solution, especially in our current work-from-home era and the current rush for housing,” he said.

“Ultimately, when the property market stabilises, many will find that home ownership, along with upgrading, is in Singaporeans’ DNA.”

“Source: [In Singapore, a dream home is within reach for millennials – but the wait may be long] © Singapore Press Holdings Limited. Permission required for reproduction”

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