Singaporeans’ Housing Aspiration: 73% Eyeing S$1-3M Dream Homes, Despite Broader Financial Pressures

SINGAPORE, 15 August, 2024 – ERA Singapore’s (“ERA”) inaugural “2024 My Dream Home Survey” – a study of the Perceptions, Preferences and Pressures of Singaporeans and their ideal home – has revealed that a significant majority of Singaporeans are ready to invest heavily in their dream homes.

• Size of property outranks neighbourhood preferences, amenities or investment potential, while affordability remains top priority
• 34% want to buy a private condo, and 32% plan to do so in the next 3 years
• Key financial pressures – affordability, high interest rates and taxes, and sufficient loan quantum – may impact Singaporeans’ dream home aspirations
• Generational insights reveal Singaporeans’ pragmatic approach to owning property across ages

One-third or 34% are looking to buy a private condo for the next home purchase, where almost three-quarters or a staggering 73% of these respondents are willing to spend S$1-3 million. 32% plan to do so in the next three years.

The survey, conducted in July 2024 with 1,737 respondents and in collaboration with Ngee Ann Polytechnic’s School of Design and Environment, showed that the top three priorities for Singaporeans’ dream homes are affordability, proximity to public transport and property size.

The preference for space is a recurring theme and outranks neighbourhood preferences or nearby amenities. Singaporeans’ wish-list for their dream homes include a large living and dining area, large bedrooms, as well as smart home solutions that provide the ability to control electronics and appliances remotely. Common facilities such as a gym, function room and kid-friendly swimming pools are also on their list of priorities.
However, challenges such as property prices, high interest rates and property tax, inability to secure a larger loan and Additional Buyers Stamp Duty (ABSD) continue to impact Singaporeans’ home ownership aspirations.

“The findings of ERA’s inaugural ‘My Dream Home Survey 2024’ underscore a remarkable trend among Singaporeans: a strong willingness to invest significantly in their dream homes,” said Marcus Chu, CEO of ERA Singapore. “Despite financial hurdles that potential buyers may face, majority are ready to spend to secure their ideal living space, highlighting the importance of home ownership as a cherished goal for many in Singapore.”

Mr Pow Ying Khuan, Lecturer at School of Design & Environment, Ngee Ann Polytechnic said: “The survey reveals a high satisfaction rate of 79% across all property types, highlighting the success of public policies in providing Singaporeans with a roof over their heads. High affordability for BTO flats, with 61% of respondents agreeing or strongly agreeing on their affordability, suggests that financial assistance programs and housing policies have been effective in keeping public housing affordable.”

“Pressures such as high property prices, rising interest rates, and ABSD remain even as cooling measures have successfully helped to tame price growth in private property, evidenced by the slowing growth in URA Property Price Index. Despite this, prospective private home buyers have a healthy budget of S$1-2 million for upgrading aspirations, even if it may mean settling for smaller units or moving to less preferred areas.”

“Introducing innovative design solutions that maximize space and improving the value proposition of properties in less preferred areas through enhanced amenities and infrastructure can help distribute housing demand more evenly across regions. Addressing these affordability challenges and budget constraints will be key to ensuring that those who seek to improve their living conditions can do so, aligning with Singapore’s ongoing growth and development.”

Perceptions

• Singaporeans Aspire To Upgrade Their Current Homes
The survey indicates a healthy level of satisfaction among Singaporeans with their current housing arrangements, as 46% of those polled said they were satisfied and 33% said they were highly satisfied.
However, locals have strong aspiration to upgrade even though most are satisfied with their present housing. 34% are looking to buy a private condo next, 29% want to buy HDB resale, while the rest considered Build-To-Order (BTO), Executive Condos (EC) and Landed properties.
In particular, 35% of Millennials, 37% of Gen X and 37% of Baby Boomers and Seniors prefer to upgrade their homes to condos.
Respondents also see affordable homes across various segments. About half or 45% agree or are neutral on new and resale private properties being affordable. On public housing prices, 32% agree that resale HDB flats are affordable, while 61% feel the same about BTO flats.

• Perference
Future Aspirations: Private Condominiums in Demand
A notable 34% of respondents aspire to buy a private condominium, with 32% planning to do so within the next three years. 55% said they would buy new condos, while the other 45% were open to resale condos.

58% of respondents who want to buy a condo have an ideal budget of S$1-$2M, which is within the price range for a two-bedroom private condo in the Outside Central Region (OCR), and another 20% of respondents have a budget of S$2-3 million. This aligns with transaction data in the first six months of 2024, with 64% of transactions priced at S$2 million or less and another 26% were within S$2 – 3 million.

Survey outcomes show that locals who want to buy condos have a clear preference for City Fringe (24%) and East (22%) areas.
Another 23% of respondents who have plans to buy a next property are looking to buy an HDB resale flat, with City Fringe and the East areas being most popular amongst this group.

What Singaporeans Want: Affordable, Accessible and Right-Sized Homes
92% of respondents currently own a home, reflecting how home ownership remains a paramount goal for Singaporeans.
When considering their next property, affordability tops the priority list for majority of the respondents, while accessibility to public transport and size of property also rank top-of-mind.

“Even as home ownership remains key to Singaporeans, we see a notable shift in preferences – for larger property size and larger communal spaces such as living and dining spaces being top priorities aside from affordability,” added Mr Chu.

“These days, more Singaporeans may be spending time indoors at home as hybrid work arrangements become the norm. Larger spaces may also be more ideal as multiple family members congregate in the same space, especially with more families considering multi-generational living arrangements these days. The overall findings in terms of Preferences of Singaporeans reflect their pragmatic approach towards home ownership, balancing personal needs with long-term value.”

• Contrasting Generational Needs For Dream Homes

21 – 27 y.o.: Gen Z Look to HDB Resale and BTO Flats as First Home With Aspirations To Upgrade

85% of Gen Z respondents indicated home ownership as “important” or “very important”, further underscored by the fact that 35% of them have plans to purchase a property within the next 3 to 5 years.
With their budding careers and earning capacities, only 24% of Gen Z currently own their homes. 23% of Gen Z will buy resale HDBs while 59% of Gen Z look to a BTO flat their first property purchase.

59% of Gen Z aspire to upgrade to a new private condominium in the next 3 -5 years, and 55% have budgets of between S$1-2 million with the North-East as the most popular choice. This is likely due to affordability of homes in this region, compared to the older generations who prefer City Fringe areas or Core City areas.

Conversely, Gen Z respondents seeking an HDB flat primarily favoured the East, with approximately 24% indicating it as their top choice.

28 – 43 y.o.: Millennials Opt for City Fringe Condos, with 20% Ready to Invest S$2 – $3 Million

35% of Millennials surveyed expressed aspirations of moving into a private condo, with 42% aiming to do so within the next 3 years.

Whilst majority of Millennial condo seekers (54%) target a price range of S$1-2 million for their next property, this generation is most likely to have a high budget for a private condo with 20% ready to invest between S$2-3 million. Approximately 25% expressed a desire to reside closer to City Fringe as their preferred location for their condo.

Another 45% of millennials indicated interest in purchasing an HDB flat. 62% are willing to spend between S$500,000 to S$1 million, comprising a healthy budget for the vast majority of HDB resale flats. Based on HDB resale transactions in 1H 2024, 97% of the flats transacted are below S$1 million.

Millennials’ property purchasing decision are strongly influenced by their housing needs, such as affordability and size, without preference for new or resale condos. This trend can be linked to their longer careers, giving them more time to build wealth. Without the immediate need to save for retirement, millennials have more flexibility in their housing budgets.

44 – 59 y.o.: Gen X Balances Budgets with Strategic Investment

Similar to Millennials, Gen X respondents showed the most interest in purchasing private condos at 37%. 54% indicated that they had a preferred budget of S$1-2 million for their future private condo home and 18% of Gen Xers are comfortable with a budget range of S$2-3 million. Half or 52% of Gen X condo seekers plan to move in the next 5 years.

Gen Xers display an overwhelmingly strong preference for new condominiums, with a significant 64% of them prioritising newly-built properties – far surpassing other generational cohorts. This preference likely stems from the appeal of greater potential for capital appreciation, qualities that align well with the long-term financial goals of Gen Xers. City Fringe areas (29%) and the East (23%) are most sought after by Gen X when it comes to their dream condos.

As early entrants into Singapore’s property market, Gen Xers have benefitted significantly from price appreciations during past market booms. This has contributed to a strong belief that properties are sound investment vehicles.

Even so, roughly 44% of all Gen X respondents expressed interest in purchasing an HDB flat for their future residence. Notably, even though the bulk of Gen Xers (51%) belonging to this subgroup indicated that they had a budget of S$500,000 to S$1 million in mind, a substantial number of them (46%) preferred a more conservative budget of under S$500,000. The conservative budget that falls within S$500,000 could indicate their intent to move to smaller flat types. In 1H 2024, 32% of resale transactions were transacted below S$500,000 and well distributed islandwide.

60 y.o. and above: Baby Boomers, Seniors Focus on Right-Sizing and Legacy Planning

Baby Boomers and Seniors showed substantial interest in continuing their property journey, with 54% of this demographic expressing intentions to purchase another property. This is likely driven by a desire to right-size, given that 33% of the above demographic consists of two-person households, the highest percentage among all age groups.

Supporting this notion, the large majority of all Baby Boomer and Senior respondents, 70%, indicated that their future property purchase is intended for their own stay. Also, the ABSD refund for single seniors aged 55 and above, announced in April 2024, could further motivate this group of buyers to right-size.

Just slightly over half or 56% of older condo seekers indicated a preference for the S$1-2 million range, with a small but significant minority of 22% expressing comfort with a budget of S$2-3 million, possibly due to considerations of wealth preservation and legacy planning.

In contrast, 57% of older HDB flat seekers displayed an inclination towards flats under S$500,000, although 38% were open to spending between S$500,000 to S$1 million. Similarly, this too reflects a desire among these senior respondents to right-size and access retirement funds, while still having a home of their own. Most older condo seekers showed keen interest in residing in the City Fringe (25%), and 41% intend to purchase within the next three years.

• Pressures

The top three pressures that homebuyers face today are affordability, higher interest rates and property tax, as well as difficulty securing a larger loan.

Among the responses received about challenges faced in home ownership, 25% of the responses indicated private home affordability is a concern. This may indicate respondents find new home prices a challenge and could be more inclined to buy resale.

In 1H 2024, 64% of non-landed transactions fell within S$2 million and another 26% were within the S$2-3 million range. Among which, at least 26% of these deals were within the Rest of Central Region (RCR). The price gap between new and resale homes remains noticeably wide, with median prices in the RCR and OCR showing a difference of nearly 37% and 39%, respectively.

17% of respondents said interest rates have impacted affordability and 16% said this impacted loan eligibility. Another 13% of respondents agree that the ABSD is a key barrier to them buying their next property.

The survey findings are reflective of the softening of new home sales in the first six months of 2024, driven by economic challenges and elevated interest rates, reflects a more cautious buyer sentiment. This could be further compounded by pricier properties and more stringent financing conditions.

That said, potential rate cuts by the U.S. Federal Reserve could alleviate the pressure on local mortgage rates, making home loans more affordable and potentially stimulating Singapore’s property market.

“As Singaporeans navigate the evolving landscape of home ownership, their Perceptions, Preferences, and Pressures they face will continue to shape their housing decisions,” Mr Chu added. “Given that the aspiration to invest in their dream homes remains strong, Singapore’s homebuyers will require personal financial resilience and careful planning to turn these aspirations into reality.”