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8 Key Social And Demographic Trends That Will Shape The Singapore Property Landscape
It is now 2013 and it seems more and more likely that 2014-2015 will witness some fireworks in the property market in terms of demand and supply. However, how the property market performs are not solely based on demand and supply. Social trends and demographic shifts are known to bring about massive changes in demand and supply of every product and service. The best example of how powerful demographic shifts can be is to study the baby boomers generation.
Although Singapore is small in land area and population, we are not immune to these impacts that can greatly affect our lifestyles. A small population also means that even apparently small numbers can mean big percentage points when we superimpose them on the national level. In terms of the property market, here are 8 of the major social trends and demographic shifts that is going to shape the Singapore property landscape going forward.
1) Aging Population
The life expectancy for Singaporeans is now up to 84. Baby boomers and the immigration generation of the 1950s are starting to retire if they have yet to do so. Generation X which is responsible for major technological and social trends will follow suit in about 10 years. As we are not replacing ourselves adequately, the government will continue to consider and introduce policies to address this issue. We are already looking at extended retirement age, increasing CPF minimum sums, studio apartments introduced by HDB, increasing import of foreign talent, etc.
If retirees made good investments earlier in the years, they could be looking at maturity of a huge load of financial investments. CPF money will also start to be drawn. Retirement homes will start to look attractive.
2) Rising Divorce Rates
It used to be taboo to just mention the word “divorce”. These days couples divorce for issues as basic as personality differences. You would think that couples would find out about each other’s personalities before tying the knot. Celebrities marrying, divorcing, and remarrying over and over again has made divorcing as soon as you grow tired of your spouse socially acceptable. And with all the news on scandals getting into the public domain, it is starting to seem like extra-marital affairs are part and parcel of marriages.
The numbers for divorces and annulments have been rising each year from 2005 to 2011. Not only is this a particular concern for the SDU, it also serves an impact on properties as well.
The average age of a divorced couple is 41 for males and 37 for females. The median duration of these marriages is 10 years. This is a very powerful force. You might expect that getting a HDB flat is one of the first things that couples do when they get married. And they will have to sell it off when they have divorced. This results in a very healthy bank and CPF balance for these new singles. At the median age of divorcees, not only are they eligible to buy HDB resale flats as singles, they are also likely to be at their peak of their disposable income.
3) Decreasing Size Of Households
From the year 2000 to 2010, the average size of households has decreased from 3.7 to 3.5. In the same period, 1 person households have grown form around 75,038 to 139,799. 2 person households grew from 157,397 to 215,429. It is possible that the great performance of shoebox apartments are attributed to this segment. Whatever the case, we could be looking at more smaller apartments being built and packed together to cater for smaller households.
4) Singles Taking Longer To Marry
The median age for people to get married is steadily climbing for both males and females. This segment of the population have saved up in preparation to purchase their first homes. The first thing that they will do when married is to buy a property. At this age in our modern era, they are also likely to be exposed to property investment education where property gurus conduct seminar and sell books on how to make their first million in properties. Financial freedom experts have hit the mainstream since the early 2000s.
5) Decreasing Birthrate
To keep the economy growing, the population has to grow at a steady rate. And with our declining national birthrate much publicized, the only short term solution is to welcome new expatriates until our birthrates can keep up with economic growth. The speed of introducing expatriates will have a huge impact on the property market.
Expatriates who find Singapore a great place to call home will apply for permanent residency. And more of these permanents residents will become citizens. More citizens will result to an increasing need for more residential housing. The demand for both BTO and resale HDBs will continue to be strong.
6) Marrying Foreigners
More and more people are marrying foreigners. This is hardly surprising when about 1.5m of our 5.3m population make up of foreigners. There appears to also be a social element contributing to this trend as both genders are starting to magnify the flaws of opposite genders in public through social media. This only serves to create a greater and greater social acceptance. There is nothing wrong with it. But we have to accept that we live in a modern city with deep embedded culture. Just like how divorces are viewed as mentioned earlier.
So instead of 2 citizens marrying and buying a house. It will now be 1 house per citizen. This inadvertently doubles the demand for housing. Although the numbers of citizen to non-citizen marriages are still small, don’t forget that with our small population, a small number can mean big figures in percentage points.
7) Properties Being A Sign Of Social Status
Properties used to be just a roof over our heads. But with the property fever hitting Singapore like a hip Korean dance track, it is slowly becoming a sign of social status. In dating events, singles are no longer asking the other singles whether they have a property. Singles are now asking how many properties they own! The property gold rush is not only participated by first time buyers. Second property buyers are also actively taking part as well.
The relentless pursuit for more properties are making rookie investors taking on a huge amount of financial leverage to own more properties. Property gurus are advertising “how to own 10 properties with no money down”, property exhibitions come to Singapore with the intentions of taking investors’ money overseas, and more and more books are being published on radical ideas on how to make money with property. It looks like the property fever is not going to cool off anytime soon.
8) Social Media And Technology
How can we even discuss social trends without a mention of how social media and technology has changed the way we communicate. People no longer meetup with friends every week to gossip and chat over coffee. We can now keep in touch with all our friends at all times just by a few touches on a smart phone. Just get on a ride on the MRT and you will see everyone fiddling with their smart phones. It is also very hard these days to have a chat with someone without being interrupted by a message notification from a phone.
So engrossed are we with mobile technology that it feels like we are spending more time interacting online than off it.
This trend means that property hunters can quickly make decisions on buying decisions by aggregating information quickly and ask for quick opinions from friends and professionals. Pictures are shared quickly and good buys are going to be passed around virally. The power of social media is not something to be doubted. The new generation of youngsters are growing up with all these iPads, Facebooks and Androids. They will be a real force to be reckon with when the masses of this segment acquire buying power.
What It All Adds Up
If everything remains constant, we are looking at more smaller sized apartments packed more closely together. The property landscape may start to visually resemble Hong Kong. The good thing is that Singapore is always changing. And the government is always brave to introduce policies that creates sustainable improvements in the long term. The multiple rounds of property cooling measures is a testament to that. It will be interesting to see the tradeoff effects on the property market.