Rise of young condo owners: The great wealth transfer in Singapore

PHOTO: Stackedhomes

PUBLISHED ONJuly 23, 2023 2:13 AMByRyan J

While property prices seem to be on the high, I'm noticing something else that's low — the age of condo buyers.

20-something condo buyers I initially chalked up as "crypto-millionaires" that I still see despite that scene having died down. This brings me to the subject of today's newsletter — the great wealth transfer…

Either Singaporeans are getting rich younger, or…

The great wealth transfer may be happening sooner than we think.

Over the past three years, I've had many coffee shop talks with realtors; and while I don't have the data neatly quantified, it's quite clear that there are more and more young condo buyers.

I don't mean people in their mid-30s who have done well. I mean buyers as young as 25 or under. And unless our youngest generation are financial prodigies, I doubt those purchases are from their own savings. Most of the time, condo ownership comes courtesy of a huge down payment, from the bank of Mum and Dad.

Singapore is ageing, and the previous generation is passing on its wealth. And unlike in the previous decade, we're aging rapidly. It's estimated that by 2030, almost a quarter of our population will be 65 and over.

This differs from the past, where the wealth of the previous generation is diluted among a larger populace. Instead, the wealth will be concentrated in the hands of fewer individuals.

What happens to the property market then? Speculatively speaking:

There will be a burst of younger Singaporeans moving into the private market sooner, possibly even bypassing the step of getting a BTO or resale flat first. This could explain why condo sales have been brisk despite all the measures, at the time of transitioning.

Most Singaporeans can’t inherit HDB flats from the previous generation. No one can own two flats at once. At the same time, foreigners can’t buy these HDB properties. This is likely to result in a deluge of vacant flats, limiting the future upside of HDB resale prices (unless there are new rules to circumvent this).

If the government doesn’t step in to prevent the creation of a rentier economy, Singapore could lose its competitive edge.

Look, I love property as much as anyone; that's why I write all this. But we can't afford to have a situation where everyone uses their newfound wealth to buy condos and try to collect rental income.

Capital locked up in properties isn't circulating into the stock market, new start-ups, helping to create new jobs, etc. We're a small country and we need to keep that edge.

Developers will need to adapt to cope with the new buyer demographic. Some of this is already happening: developers are more focused on sustainable buildings, for example; and this is a quality prioritised more by younger Singaporeans.

But a bigger change will likely occur with unit layouts. Singaporeans increasingly marry later and have fewer children, so we may see falling demand for the large four and five-bedder units, or five-room or larger flats. Or we could also see the reverse, where wealthier Singaporeans purchase larger homes to knock down walls to create bigger living spaces.

Some of these things can be hard to see and accept right now. At the time I'm writing this, having too many empty flats is the exact opposite of the problem we have in 2023 (i.e., not enough flats). And most realtors will tell you buyers want larger homes, not smaller (because right now, we have a lot of HDB upgraders who are after family units).

But I suspect we may see a quicker reversal at some point in the coming decade, as more of the previous generation pass on their wealth.

Speaking of passing on, do you know what else has departed Singapore?

Our void deck culture. It's nice that residents are now restarting mini-libraries in void decks; but there was a time the government had such initiatives.

I also remember, growing up in the '80s, that the void deck was the place where you learned to play Carrom, learned the C-chord fingering on a guitar, or played checkers with the old uncles.

These days, void decks are mostly places for funerals, or where you stare at signs prohibiting you from playing ball games. Even setting up a resident's corner seems like such a big chore.

That's not to say that there haven't been any efforts. Take the void deck at Alkaff Oasis for example, doesn't it look so welcoming to come home to?

It's unfortunate, because when you have an ageing population, what you want are residents (older ones especially) going out more and interacting. There's also no point in enforcing a mix of rental flats, and ethnic quotas, if we're not also going to encourage the meeting of different backgrounds.

And as for young people being noisy in the void deck, please — I'll believe that's an issue after we learn how to peel them away from a PS5.