Ageing of population not a concern for private home market

SINGAPORE’S rapidly ageing population could be a major hindrance for the private housing market.

Singapore’s median resident age has risen from 37.4 at the mid-2010 level to 42.1, by mid-2022. In mid-2022 around 16.6 per cent (compared to 9 per cent) of the Singapore resident population is over 65.

As the population grows older, the demand for homes may fall. As the population ages, many will stop working. This can affect income levels and the ability of homeowners to upgrade their homes.

A growing trend is downgrading your home. This could be done by selling an owner-occupied house and replacing it a cheaper one. Imagine people moving from large landed houses to condominiums or from leasehold homes to older freehold homes. Or from private homes and HDB housing to smaller HDB apartments.

It makes sense to make such a move. Many times, the paper gains of the appreciation on a home held for many years are realized. It is possible to use the money saved by downgrading to invest in dividend paying stocks or high-quality fixed income securities that can generate returns of up to a few percentage points per year to fund retirement. HDB residences are usually cheaper than private properties.

Downgraders can contribute to a thriving housing market. Some people may choose to move from HDB units to private ones and pay a lot of money for them.

Private homeowners are required to wait 15 months after they sell their private homes in order to purchase an HDB resale apartment that is not subsidised. This wait-out does not affect people over 55 who are moving out of a private house to a HDB-resale apartment with four rooms or less.

Also, older persons who are not planning to outlive their land lease can buy a leasehold house with 30 years still outstanding. It also improves the liquidity of older leasehold houses.

An ageing population doesn’t necessarily translate into a weaker housing market, as many elderly people may want to live independently while still earning an income.

Demographics of one- or two person resident households led by older persons are growing fast. Residents households consisting of a married household member who is 65 years or older and a partner grew 162 percent between 2010 and 2020. Over the same span, the number grew 131 percent for one-person household residents with a person 65 and older, while the total number of households increased by 21,4 percent.

Some older people might be able to live more independently as technology improves and homes become smarter. Entrepreneurs with a lot of experience could offer more services in order to accommodate the increasing number elderly people living independently.

The growth of the labour force rate for residents aged 65 and over from 17.6 percent at mid-2010, to 32.1 percent at mid-2022 was faster than among residents aged 15 and older who saw a rise from 66.2 percent to 70. Between mid-2010 ad mid-2021 the labour force involvement rate among residents aged over 75 doubled, from 5.4% to 11.8%.

Singapore raised its retirement age to 63 from 67 and the re-employment to 68 by July 1, 2022. The retirement age, and the re-employment will both rise to 65 years in 2030. The tightening labour market combined with the tailoring of working conditions to suit older workers will result in a higher participation rate for elderly people.

Many destinations in Asia and nearby offer much cheaper alternatives for those who wish to enjoy their golden years. Selling homes overseas may convince Singaporeans to buy a bigger home overseas, then enjoy the windfall and live in an area where their money goes further.

It is possible that even older Singaporeans who no longer work will not feel the need to move abroad. Some Singaporeans who have children here may wish to stay close to them because the job opportunities for young adults here are so good. Singapore’s public healthcare system is highly regarded by many older Singaporeans who choose to live here.

Singapore can be a great place for wealthy elders, both local and foreign, to live because of the high quality of healthcare, good infrastructure, and level of safety. Some wealthy seniors may invest more in their Singapore homes because they want a safe, comfortable place to retire.

Property developers and owners are being challenged by megatrends such a remote work, the increase in online retail, climate change, etc. to create spaces that will meet the changing requirements of users. Add to that a population of older people who may be relatively active and wealthier.

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A housing developer that is prepared for the future may want to appeal to older homebuyers who stop driving and are looking for homes where they can easily move around. They also need to be able to work from home. A development that is integrated, with easy access to food, banks, medical facilities and groceries could appeal to older home owners who no longer drive. Many older people prefer new homes over renovating their old units.

The aging population does not have to be a problem for the market of private homes. It can actually offer a rich harvest for developers that are able meet the needs and wants of the burgeoning ranks of wealthy elderly.

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