Singapore’s ageing population is not a new issue. But as more of Singapore’s older generation who are living in HDB flats begin to release their units in the resale market, will the resale HDB market be affected? And if so, how?
Older generation putting resale flats in market as they pass on or upgrade
Though mortality is not everyone’s favourite topic, it has to be dealt with, and better earlier than later. As ageing HDB owners from the baby boomer era pass on, there might be an increase supply of HDB flats flooding the market. And as the government pushes out more new BTO flats, young home buyers may be spoilt for choice. Hence, resale flat prices may be pushed down as supply increases and demand decreases.
Will this result in a supply glut within the next decade and a half?
Currently, about 20,000 resale flats exchange hands each year. The number has remained somewhat constant over the past 3 years. But some property analysts are expecting up to 8,000 more resale flats to hit the market each year of the next decade. This is almost a 40% increase.
In 10 years’ time, most young couples who have moved out of their parental homes would have bought new flats directly from the government. This means they will be unable to inherit their parents’ flats and will be forced to sell, in turn leading to a supply glut.
Not just ageing population of humans but flats as well
The government will have to start considering the issue rather seriously now as a decade will pass in the blink of an eye. And it is not only the human population that is ageing, but also that of the housing population. Ageing HDB flats to be specific.
There may be a sudden spike of flats with less than 59 years left of their lease. Usually flats begin to depreciate once they hit the big 40.
The previous occurrence of a supply crunch happened in the turn of the century, when the government restricted the building of new BTO flats. This led to many buyers turning to the resale market, hence pushing prices up quickly and rather hastily.
What can the government do to ensure the situation does not swing to the extremes?