Private homes are not at risk from an aging population

SINGAPORE’s population is rapidly aging – could this be a problem for the home market in Singapore?

Singapore residents’ median age rose to 42 years by mid-2022, up from 37.4 year in mid-2022. By mid-2022 about 16.6% of Singapore’s resident population will be aged 65 and over, compared with only 9 percent at mid-2010.

While the rising interest rates on home loans could be a short-term threat, it is the potential decline in demand that may affect home prices long term. As people get older, they may stop working and their income levels fall.

The trend of downgrading homes, as in replacing an owner-occupied residence with a lower priced one, is likely to increase with the ageing population. People moving from large landed properties to condominiums. They may also move from older leasehold houses to freeholds.

Such actions make sense. Paper gains on an appreciated home can be realized. Downgrading allows you to free up money to invest into high-quality, dividend-paying bonds or equities. These investments can help you fund your retirement by generating payouts as low as a few percent per year. HDBs have much lower management costs than private houses.

Downgraders are a vital part of a healthy housing market. Some people move from HDBs to private houses and may pay a high price for certain units.

After selling their home, private homeowners will have to wait 15 month before they are able to buy a HDB resale without subsidy. This wait-out time does not apply to 55-year-olds who move from a home into a HDB Resale Flat of four or less rooms.

Some older individuals may find it acceptable to purchase a property that is still under a 30-year land lease, since they are unlikely to outlive this tenure. This increases the liquidity of older home leases.

It is important to note that an aging population does not necessarily mean a decline in demand for homes, because older people who are still working and living independently may be more likely to want a home.

Growing numbers of older residents living in one-person or two-person homes are headed by an elderly person. Between 2010-2021, resident households that included a married reference person who was 65 years old or older, as well as their spouse, grew by 162 %. Over the period 2010-2021, the one-person resident household with a person over 65 years of age grew 131% while the resident households grew 21.4%.

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Possibly as older people become more proficient with technology and their homes become smarter, many may be able live independently. Smart entrepreneurs may offer additional services to help the increasing number of elderly living independently.

The labor force participation rate for residents over 65 increased faster from 17.6 to 32.1% between mid-2010 and mid-2022. Between mid 2010 and mid 2021, the labor force participation rate among residents over 75 years old more than doubled.

Singapore increased the retirement age from 62-63 years old and the reemployment from 67-68 years. By 2030, both the retirement and reemployment ages are expected to rise even further. As the job market becomes tighter and work conditions are tailored to older workers’ needs, we can expect a rise in the participation rate of elderly workers.

Many places in Asia offer much less expensive alternatives to living out your golden years. Singaporeans can sell their homes and move to a bigger house overseas. They will then get a large cash sum from this exercise.

Singaporeans may still be tempted to leave the country even if they stop working. Some may have young adult children who are employed here and want to live near their families. Singapore has a public healthcare system that is high quality and affordable for many older people.

Singapore is attractive to wealthy seniors, local or foreign, due to its high standard of living, stable political environment, excellent healthcare, and public safety. Some wealthy older people might want to invest more into their homes because they spend more of their time at home with age. They may also be looking for a sanctuary where they can enjoy the golden years.

The increasing adoption of remote work, the growth of internet retail and climate-changed challenges property developers to provide spaces which meet changing user needs. You can also add an aging population with people who are active, wealthy and possibly older.

In order to attract future-ready home buyers, a developer might want to offer homes to people in their 70s or even 80s that are easy to maneuver and provide the flexibility of working from home. The convenience of living in a development with grocery, food, banking and medical services nearby could attract older homeowners who are no longer driving. Other elderly people might prefer new homes, as they don’t want to deal with the hassle of renovating older units.

Ageing populations can bring rich pickings to developers who are capable of meeting the growing needs of the wealthy elderly.

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