Customer service manager Sukanda Thepsupa, 26, bought a 34 sq m new condo in Bangkok for 3.5 million baht (S$142,000) in June on a 100 per cent loan.
"I had already intended to buy a place before Covid-19 because I did my calculations and realised that, if I spend just 3,000 baht more a month on a mortgage, I could buy a place," said Ms Sukanda, who had been renting a condo for 7,000 baht a month.
"This place I bought is brand new, and I even got a 500,000 baht discount from the developer," she said.
Like her, millennials who are now in their mid-20s to late-30s, are finally moving out of their rented apartments or parents' homes, and getting their own place. The Covid-19 pandemic has been a catalyst.
But making plans to buy their own homes hasn't been easy.
They have had to navigate an environment where home prices are still too high for those just starting out in life.
Ms Sukanda has to pay 10,000 baht monthly for the 37-year loan.
That's about a third already of her monthly income, and she admits that she now tries harder to watch her expenses.
But for her, location and the view are important as she works from home. From her bedroom, she can enjoy the view of sunset, and on occasion she heads up to the rooftop for an even better view.
"I find this place more convenient, and it helps to have a nice view and a common area where I can go to work if I want to get out of the apartment," she said.
Millennials who take the plunge and sign the dotted line on a mortgage, mostly have to settle for a cheaper houses in the suburbs. If they insist on staying in prime urban districts, pricey homes that are so small that having children is out of the question.
Still, many millennials are buying homes, and property developers and banks are avidly wooing them. Some have found opportunities to produce new sources of income during the pandemic, while others have been lucky enough to have parents who could pony up a zero-interest loan for their only son or daughter, or subsidise part of the cost.
The Covid-19 pandemic did not bring down home prices, which are still beyond the reach of most just starting out in life.
Own or rent? That is the question
In Seoul, the average price of an apartment hit 1.1 billion won (S$1.3 million) in April, up from 607 million won in 2017.
Housing in China's busiest and most developed cities such as Beijing, Shanghai and Shenzhen cost around 14 times as much as the average salary.
In Tier 2 cities, the price is about seven times the average salary, and it is five times the average salary for cities ranked Tiers 3 to 5, according to the Lincoln Institute of Land Policy in 2020.
Data from real-estate services company Savills shows that in Tianjin, a city of 15 million people south-east of Beijing, apartments in upscale areas sell for around US$9,000 (S$12,286) per sq m, or about US$836 per sq ft, on a par with some of the most expensive parts of London, though disposable incomes are seven times as high in London as in Tianjin.
Tokyo and all the opportunities it offers continue to lure those in their early 20s. But they are more likely to rent than make enough to get a place of their own.
More than three in 10 adults in Japan are renting. Even though banks there offer near-zero interest on housing loans, leasing has traditionally been the more attractive option because it offers far more flexibility than the mortgage payments that come with buying a home.
Millennials, in particular, are mobile, and may move across the country for work. A vast majority have so-called ancestral homes passed down from generation to generation, reducing the need to buy their own home even if these "ancestral homes" are out in the rural areas.
Mr Shuto Yano, 28, moved out of his family home in neighboring Saitama prefecture to rent a 20 sq m apartment in Shinjuku in 2018, after tiring of commuting more than an hour on packed rush hour trains daily.
The game app developer told The Straits Times that paying 85,000 yen (S$1,025) a month for a tiny unit in the heart of central Tokyo was a worthwhile investment, as it allows him to walk to work, and walk home from catching a late-night film in the Shinjuku entertainment district.
"This fits my lifestyle to a T," he said, in his Alexa-equipped unit where lights can be switched on and off by voice command.
"On my off days I tend to laze around, not doing anything much else but being on my computer all day long. And I don't need that much space living alone anyway - more space means cleaning up is a bigger hassle."
In Indonesia, millennials still baulk at securing a bank loan to buy their own home, as they weigh the merits of being stuck with a 25-year mortgage, or having to turn to their "lenders of last resort" - their parents.
Taiwan's outrageously pricey homes, meanwhile, have had millennials agonising over home ownership and renting for life.
Says Ms Jhoanne Marie Villamiel, the chief executive officer and real estate broker at PrimaShelter in the Philippines, "It's a sad truth that real estate prices appreciate faster than the income of employees… There are so many Filipinos right now, especially minimum wage earners, who want to have their own property, but we don't have any to offer them."
She said the cheapest home her company can offer, in Naic town 50km south of the capital Manila, requires a household income of at least 23,000 pesos (S$623). But the minimum wage in Naic barely touches 14,000 pesos.
Some compromises
The pandemic did provide opportunities for millennials to transition from being renters into full-fledged home owners. It has, for instance, made living farther away from the city, where prices are lower, an attractive option.
In Taiwan, realtors compare the city-suburb picture to an egg: The city centre is the yolk, and the suburbs the egg white. With Taipei as an example, younger people tend to buy in the "egg white areas" that are 40 minutes to an hour away from where they work.
Some millennials have managed to hold on to their jobs despite the global slump caused by the pandemic that has led to massive lay-offs.
Others, like Mr Aze Gedalanga, 39, a content writer for an outsourcing firm in the Philippines, and his wife, Sheila, 38, a business consultant, have even been able to land jobs that pay more.
So, buying a home suddenly became even more viable, even if it's in the middle of a hard, sweeping lockdown, and the house is 60km south of Manila.
"It was a leap of faith… We needed to have our own house. I think it's a necessity, whether or not you're feeling uncertain about getting one," said Mr Gedalanga.
Property developers and banks have been throwing incentives at more millennials to entice them to buy their first home.
Bank Mandiri, Indonesia's largest lender by asset, said around 70 per cent of its overall annual credit went to millennials as of October.
The bank is now offering a special mortgage that allows millennials to pay off their loans with smaller instalments that gradually increase, or pay only the monthly loan interests while their houses are still being built. It also offers flexibilities that include loans of up to 25 years.
Dr Sopon Pornchokchai, president of the Agency for Real Estate Affairs in Thailand, said he believes buying a house now "is in fact easier in a way" for millennials.
"During their parents' time, the down payment cost was higher, and the value of a property was higher," he said.
For Mr Daniel Droter in the United States, there was no rush to by his own home back when he was in his 20s. Plus, he couldn't afford it anyway.
But now that he is 34, he thinks his dream home is within reach, possibly next year. He's working as a firefighter and is married to a civil servant, Bonnie. They have an infant daughter.
"(My wife and I) both work. I work a bunch of overtime, and I have a job that provides overtime. Not many jobs do," he said.
But he will have to settle for a place an hour's drive from where he's currently staying, in Falls Church, Virginia state.
The area around Falls Church is too expensive, he said. The house across his street costs about US$700,000 (S$957,000). Drive an hour away and the price drops to US$200,000 for a house of the same size.
'Dad and Mum Fund'
But signing a mortgage isn't always a viable path, especially in countries where home prices are exorbitantly high and interest rates remain unattractive. In these places, it usually helps to have a "Dad and Mum Fund".
Mr Julius Sandika Wirayudha, a research analyst at a securities firm, turned to his parents after he found out that he'd end up paying three times the actual price of his dream home in Jakarta's satellite city of Tangerang with a 15-year mortgage.
He used his savings to pay the first instalment that covered a third of the house, then paid off the rest with cash he borrowed from his parents. Half his salary now goes to his parents.
In China, home ownership among millennials has been high because of financial support they get from their parents. An HSBC survey done back in 2017 of young people living in urban areas showed seven in 10 Chinese millennials are home owners.
With most families being one-child units, Chinese parents see it as their duty to help their only child along.
For example, investment services manager Zhang Yingchi, 32, said she and her husband have been planning to buy a house in Beijing so their daughter could get good education.
They are currently renting a two-bedroom unit in Haidian district for 5,500 yuan a month.
"The schools in Beijing have much better resources than in my home town or my husband's in Henan in central China. We would like to raise our daughter in Beijing so that she can have a headstart in life," she said.
Delaying purchases
Millennials, though, have some catching up to do.
US Census Bureau data show millennial home ownership rates have risen sharply over the past five years. But the rates of home ownership by young Americans still trail previous generations.
According to this year's annual analysis of census data by apartment ad site Apartment List, at age 30, 42 per cent of millennials own homes, compared to 48 per cent of gen Xers and 51 per cent of baby boomers.
Many millennials in Thailand - which has the highest household debt-to-gross domestic product ratio among developing countries - are also putting off home-buying for now. They aren't in any hurry anyway, as they look at home ownership through a different lens.
"In Thai culture, it was perceived that ownership of a house and a car signifies your stability and maturity in life," said CBRE Thailand's head of research and consulting Rathawat Kuvijitrsuwan. "But that has changed with the new generations looking for the option that provides them with the best flexibility and convenience as some see ownership as liability that comes with high maintenance," he added.
He also noted an emerging trend among millennials dubbed "DINKs" - double-income, no kids households, or those couples who chose to have pets over children. "This has shifted the living space requirement without the need to plan for family expansion," he said.
Property developers expect millennials to continue driving sales in years to come.
Millennials right now have the means, and the pandemic has only opened new opportunities for home ownership, analysts say.
"As real estate professionals, we've really been targeting these millennials… They know they have the money, but they just don't know where to put it. If you teach them where to put it, teach them a house is a good investment, they see the value in it, and they will buy," said Ms Villamiel, the Filipino real estate broker.
In Singapore, a dream home is within reach for millennials - but the wait may be long
Construction delays of Build-To-Order flats have shifted part of demand to Housing Board resale market, where prices hit record high in the third quarter of 2021.
BY MICHELLE NG
Curtains - instead of walls - separate their living and sleeping areas. Their baby who sleeps in a cot at the foot of their bed near the main door often gets awakened by noises outside the door. But it is the only safe spot away from the electrical sockets and the kitchen.
This L-shaped one-room Housing Board (HDB) rental flat in Sembawang is not where homemaker Azwa Abdullah, 23, and her security analyst husband Syazryl Abdullah, 24, imagined would be their first home.
But after getting hitched last June, and with their four-room Build-To-Order (BTO) flat in Bukit Batok slated for completion only in the third quarter of 2026, this 36 m sq space they have been living in for the past 1.5 years will have to do for now.
"It's squeezy but we have no choice so we'll have to make it work," she said.
The couple pays around $240 a month in rent to the HDB under the Public Rental Scheme.
They are among the young Singaporeans who have had to adapt or re-evaluate their existing living arrangements due to housing-related challenges, which are exacerbated by the Covid-19 pandemic.
Many are dealing with a longer wait for BTO flats, rising HDB resale flat prices, and the mounting pressures of different generations living under one roof in a work-from-home norm.
Construction delays of BTO flats - the most affordable housing option for Singaporeans - due to a manpower crunch and supply shortages have shifted part of the demand to the HDB resale market, where flat prices hit a record high in the third quarter of this year and are poised to end on a high note.
Prices of private properties have also been on the rise.
Ms Azwa and her husband briefly considered buying a HDB resale flat to satisfy their immediate housing need but were put off by the high prices.
"With a baby, we really don't have an extra $30,000 to pay for the cash over valuation that sellers are asking for these days. So we decided to go for a fresh flat at a subsidised price, even though it's going to be a long wait," said Ms Azwa, who is in the midst of appealing to HDB to move them to a bigger two-room rental flat when their contract is up.
The dilemma of having to choose to wait a longer time for a BTO flat or forking out more money on the HDB resale or private market has "far-reaching implications" on social issues such as family formation and financial adequacy, said Singapore University of Social Sciences economics associate professor Walter Theseira.
"Frankly, going to the HDB resale market will set a young couple back financially by a few years at least, in terms of losing out on some of the subsidies they would enjoy as a BTO purchaser.
"So the ones who are able to consider that choice realistically, would be ones with family wealth, whose parents can chip in and make up the difference that losing the BTO market subsidy offers," said Prof Theseira.
Professor Sing Tien Foo, director of the Institute of Real Estate and Urban Studies at the National University of Singapore (NUS), noted that the average housing price to income ratio of 4.1 of four- to five-room BTO flats in the past 20 years from 2001 to 2020 is "within a reasonable range of affordability".
The ratio is even lower if HDB housing grants, which gives eligible BTO home buyers up to $80,000 in grants, are taken into account, he said.
However, Prof Sing noted that the ratio is higher in bigger flats and mature estates such as Telok Blangah.
Prof Theseira added that there is a "certain level of dissonance" between the Government's efforts to keep public housing, especially BTO flats, affordable and how prospective home owners perceive affordability.
"The Government may be right in saying that BTO flats in non-mature areas continue to be affordable, but the prospective home owner may also be right in saying that what their parents could have afforded on a similar income 30 years ago in the central region is no longer affordable to them today," said Prof Theseira.
"I do have the feeling at times that policymakers and homebuyers are talking across each other when discussing housing affordability. Nobody is saying anything untrue, but there are different aspects of the facts that each side is more concerned with," he added.
Hearing about properties in prime areas being valued and bought at record-breaking sums "might temper expectations somewhat", Prof Theseira said.
"But I think it also unfortunately makes people feel that there's some part of the Singapore dream that is not within their reach."
To address this grievance, the Government introduced a prime location public housing (PLH) model that kicked off with a BTO project in Rochor last month.
Through stricter home ownership conditions, it aims to keep future HDB flats built in the city centre in central Singapore and the future Greater Southern Waterfront affordable and inclusive for Singaporeans, both at the initial purchase and at subsequent resales on the open market.
The Rochor project saw strong demand, with more than 10 applicants vying for each of the four-room flats at the close of the sales exercise last month, reflecting Singaporeans' desire to live in a central area despite the various restrictions.
While the disruption from the pandemic may have caused some would-be BTO buyers to shift to the HDB resale or private market as an alternative option, the rising prices in both markets may "put a brake on the decision to move", said Prof Sing.
"If the price gap between BTO and resale flats widens, people will still find BTO flats to be the preferred option despite the wait," he said.
Some young families are also beset with uncertainties caused by long delays in getting their new flats.
Before the pandemic, the waiting time for a standard BTO flat was around three to four years.
It is now between four to five years - or even longer, for a small number of projects.
Demand for interim housing has also risen in tandem with longer BTO waiting time, with the number of applicants for rental flats under the HDB's Parenthood Provisional Housing Scheme (PPHS) doubling in 2020 compared with 2019.
In August, HDB announced an additional 800 such flats in August, on top of the existing 840 units, and stricter eligibility criteria.
Only households with a combined monthly income of not more than $7,000, which is reflected at the point of sale application for the BTO flat, are able to apply for these PPHS flats which are allocated by ballot.
Rents range from $400 for a two-room flat in Marsiling, $600 for a three-roomer in Hougang and $1,500 for a four-room unit in Tiong Bahru.
Information technology manager Putri Yeo, 28, and her husband are among those who had to turn to the private rental market after the PPHS criteria change. Prior to that, they had applied unsuccessfully eight times.
After their wedding in July last year, the couple had initially moved into Ms Yeo's bedroom in her family flat, but soon realised that it was too cramped to accommodate both of them as they are working from home.
They are now renting a 50 sq m studio apartment in Seletar for around $1,800 a month as they wait for their BTO flat in Kallang/Whampoa, which is estimated to be ready in 2024.
"Our rent now is double from our previous budget. We can still afford it but we have to be more careful with our daily spending," said Ms Yeo.
Space constraints and frictions arising from different generations living under one roof in a work-from-home norm and space constraints have also spurred some young Singaporeans to hasten the move out of their family homes, even without first purchasing a home.
Architectural associate Christopher Wicks, 28, said moving out of his family home two months ago to a co-living space was "one of the best decisions" he has made for himself, despite the rent eating into his future home-buying budget.
"I'd been planning to move out since before Covid-19 and I even drew up a spreadsheet to budget my finances before I made the move, so I know I can sustain this for at least the next year or two while I figure out my long-term housing plan," said the Singaporean, who is single.
"No monetary value can compensate for the psychological euphoria of living on your own," he added.
He pays $750 a month, excluding utilities, which is just under one-fifth of his salary, for a room in a six-bedroom walk-up apartment in River Valley rented from Singapore-based co-living operator Cove.
Cove's co-founder Sophie Jokelson said the company has seen a significant increase in local demand for a co-living space, with Singaporeans and permanent residents making up at least 35 per cent of their tenants as at June this year. Singles make up 88 per cent of their tenants.
NUS real estate adjunct associate professor Steven Choo said renting, whether it is to wait for a BTO flat or to escape the tensions of living with parents, is ultimately seen as a stop-gap measure by most Singaporeans.
"Only a small percentage of Singaporeans will want to rent as a permanent solution. Renting is an attractive temporary solution, especially in our current work-from-home era and the current rush for housing," he said.
"Ultimately, when the property market stabilises, many will find that home ownership, along with upgrading, is in Singaporeans' DNA."
Costs push some to find cheaper, flexible alternatives to renting
Co-living has also taken off in Hong Kong, Japan and South Korea, where pricey real estate crushes home ownership dreams.
BY CLAIRE HUANG, CHANG MAY CHOON, WALTER SIM
Squeezed out of the world's priciest property market, there is a growing group of millennials in Hong Kong who prefer a fuss-free "nomadic" lifestyle where they hop from one co-living space to another, or opt for hotel stays that are cheaper than normal renting as the tourism sector remains largely in coma.
French national Morgan Pelissier, 25, arrived in Hong Kong in February this year and always wanted a short-term housing arrangement.
"My plan at the beginning was to move from flat to flat every three months to discover new areas of the city," he said. "I'm very busy with my work and I don't want to have to care about anything like cleaning, electricity and furnishings."
The founder and head of Sparkmate, an engineering services start-up, in late May moved into his current HK$10,000 (S$1,780) to HK$12,000 a month 1,200 sq ft Central unit that is managed by co-living operator Hmlet.
"I'm leaving Hong Kong in December because I have a few companies in Europe and one in Australia, so I need to travel...I will come back in three months, maybe in this room, maybe in another, I don't know, it depends on availability," said Mr Pelissier, who shares the apartment with four others.
A room at a Hmlet apartment includes cleaning services, internet and gas, and costs between HK$8,000 and HK$30,000.
The cost of renting a 110 sq ft studio in a 56-year-old building in Wan Chai is HK$7,900 but is cheaper in areas like Mong Kok where a 140 sq ft room sets one back by HK$4,800 as well as farther out in Tuen Mun, where rental for a 60 sq ft room could be as low as HK$3,500.
General manager of Hmlet Hong Kong, Dominik Wiesent, told The Straits Times that operations have expanded on the back of a growing appetite for flexible living arrangements that come with an instant network.
The firm, whose tenants fall in the age group of 19 to 35, is now running at 95 per cent occupancy.
"We are looking to expand further because we have such high demand now and see the fundamentals coming back from a pre-Covid-19 time," Mr Wiesent said.
Since the firm began operating in Hong Kong in 2018, the clientele has changed from solely young professionals to longer staying locals and expats. Now, overseas-educated Hong Kongers and Chinese make up about 20-25 per cent or the largest group among them.
"When we first started off, we obviously had a lot of transient, young professionals and expats coming from overseas and they embraced Hong Kong and wanted to go into Hmlet because they get more than just a room, so they also have that network, community and a quick access to it," said Mr Wiesent.
Co-living has also taken off in Japan and South Korea, where pricey real estate crushes home ownership dreams.
In Tokyo for instance, social activist Anju Ishiyama, 32, gets a stunning view of Mount Fuji on a clear day from her home on the 13th floor of a 16-storey mixed-use Shibuya Cast building.
Yet living in the prime real estate does not burn a hole in her wallet: She is among about 40 residents who live in a sharehouse, known as Cift, that occupies the entire floor.
The residents at Cift - among them entrepreneurs, musicians, writers, engineers, a single mother, and a bartender - believe that companionship and friendship - with the necessary anti-Covid-19 infection measures - help tide over what has been an isolating period.
"My parents are divorced and I moved in wanting to find a family, and feel what it is like to have a family," said Ms Ishiyama.
The occasional feeling of loneliness and emptiness can be too much for bartender Dai Taura, 29. Cift has not only given him new friends but also a new perspective on how to find consensus amid disagreement while respecting minority opinions.
Since Shibuya Cast opened in May 2017, Cift has opened two other sharehouses - in Shibuya's Shoto district and another in Kyoto. There are 19 units at the Shibuya Cast sharehouse, each at 15 sq m and costing 200,000 yen (S$2,406) per month. One unit can accommodate up to three or four people and the cost can be split among them.
Mr Yoichi Ikemoto, chief editor of real estate platform Suumo, said a reason for the rising popularity of sharehouses is the chance for youth to network. "Youth can exchange ideas even in their private space, and this has merits because it can lead to project collaborations."
Co-living, a relatively new trend in South Korea, has also boomed with the number of single households rising rapidly from 2017 to reach 40 per cent of the total in October this year.
In Seoul's glitzy Gangnam district, lies a triangular-shaped architectural wonder called Treehouse - a seven-storey co-living complex for millennials, most of whom are in their early 30s.
Comprising 72 studio and loft units - each with private bathroom and kitchenette - the award-winning complex also features shared facilities such as a courtyard garden, relaxing lounge areas, work zones, laundry room, a space to groom pets, and even a car-sharing service.
Residents at Treehouse are mostly in their early 30s who want to be part of a bigger community, according to Bo.Daa, the design studio that created Treehouse.
A report released last year by co-living portal Come&Stay showed that there were 1,020 co-living spaces providing 7,306 beds as of mid 2019, up from 487 spaces and 3,486 beds in 2017. In 2013, there were just 17 co-living spaces offering 109 beds.
It costs 1.19 million won (S$1,390) to 1.69 million won a month for units which are 178 to 392 sq ft - considered pricey but tenants who want the convenience and lifestyle it offers are willing to pay.
The main users of co-living spaces are millennials who grew up in small families. They are used to staying in their own rooms and having their privacy protected, the report said.
Most millennials in South Korea rely on a unique rental scheme called jeonse, in which they pay a lump-sum deposit, usually 50 to 80 per cent of the value of the house, to live in it for two years. Tenants will be refunded the deposit at the end of the contract and the interest collected from the amount by the landlord will be the rent.
The average price of a jeonse apartment in Seoul is 614.5 million won as of June this year - up 44 per cent from 2017.
Data from the Financial Supervisory Service showed that people in their 20s and 30s took up jeonse loans from banks worth 88.2 trillion won as of June, up from 29.1 trillion won in 2017, triggering alarm.
Lawmaker Jung Woon-cheon urged the government to closely monitor debt growth among young borrowers and to come up with pre-emptive measures to ease their financial burden.
Some municipal governments have already started offering public co-living spaces for millennials.
Wanju county in the southwestern province of North Jeolla launched a "youth share house" in 2017 to help young people who had returned from big cities to take up farming and other jobs in the rural area. Those selected will be able to live in a "youth share house" for up to three years for just 50,000 won in rent monthly. The county now operates 11 such spaces.
In Hong Kong, longer stays in hotels have also become popular with locals.
The 2019 street protests followed by the Covid-19 pandemic in December that year were a double whammy for the city's tourism and retail industries.
Total visitor arrivals and hotel occupancy fell in 2019 due to the unrest but the sector was decimated by the pandemic the following year. Visitor arrivals into the territory plunged by 93.6 per cent to 3.6 million in 2020 and hotel occupancy fell to 46 per cent from 79 per cent in 2019.
In an effort to try and keep their businesses afloat, hotels and serviced apartments cut staff and slashed room prices, with some offering long stay packages at half the usual rate.
Eva Choi, 35, who works in finance felt that staying in a hotel room or a serviced apartment was far better than renting an apartment, with many to choose from that are cheaper.
The Hong Kong resident has been quite happy with not being tied down by a long-term lease.
She picks rooms that are smaller with no kitchenettes and they cost about HK$10,000 to HK$12,000 a month. The additional cost of having a "kitchen" area is about HK$3,000 to HK$4,000.
"Usually I stay in one hotel for half a year and it's based on a contract. I will ask the hotel what they offer around a month before the contract ends to see if I will continue staying there," said Ms Choi.
How long she can continue with this arrangement is anybody's guess. The hospitality industry, which has about 300 hotels, seems to be on the mend, with occupancy rising slowly, up 17 percentage points to 60 per cent between January and September this year, from a year ago.
"Hotels are getting more expensive next year," noted Ms Choi.
In the meantime, Hong Kong officials are trying to tackle the housing crunch on the territory through projects such as the Northern metropolis plan and reclaiming land for Lantau Tomorrow. They are also looking at setting a minimum floor area to make so-called nano flats more liveable.
