Owning a home in S'pore within reach, but wait may be long

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 security analyst husband Syazryl Abdullah, 24, imagined as 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 2026, this 36 m sq space they have been staying in for the past 18 months 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 about $240 a month under the Public Rental Scheme. They are among young Singaporeans who've had to re-evaluate their living arrangements due to housing-related challenges exacerbated by the Covid-19 pandemic.

Many of them 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 - due to a manpower crunch and supply shortages have shifted demand to the HDB resale market, where prices hit a record high in the third quarter.

Prices of private properties have also been on the rise.

Ms Azwa and her husband briefly considered buying a HDB resale flat 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 new flat though it's going to be a long wait," said Ms Azwa, who is asking the HDB to move them to a two-room rental flat when their contract is up.

The dilemma of having to choose to wait for a BTO flat or fork out more 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," he said.

"So the ones who are able to consider that choice realistically would be ones whose parents can chip in and make up the difference that losing the BTO market subsidy offers," he added.

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 provisions which give eligible BTO buyers up to $80,000 in grants are taken into account, he said. However, he 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 Government efforts to keep public housing - especially BTO flats - affordable and how prospective buyers 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 home buyers are talking across each other when discussing housing affordability," 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.

The Rochor project saw strong demand, with more than 10 applicants vying for each of the four-room flats at the close of sales last month.

While the disruption from the pandemic may have caused some would-be BTO buyers to shift to the HDB resale or private market, rising prices in both markets "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."

Some young families are also beset with uncertainties caused by long delays in getting new flats.

Before the pandemic, the waiting time for a standard BTO flat was around three to four years. It is now between four and five years - or even longer, for some projects.

Demand for interim housing has also risen in tandem with longer BTO wait times, with the number of applicants for rental flats under the HDB's Parenthood Provisional Housing Scheme (PPHS) doubling last year compared with 2019.

The 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, can 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 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 they soon realised that it was too cramped as they are working from home.

They are now renting a 50 sq m studio 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 our previous budget. We can still afford it but we have to be more careful with daily spending," said Ms Yeo.

Space constraints and frictions arising from different generations living under one roof in a work-from-home norm 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 leaving his family home two months ago to a co-living space was "one of the best decisions" he has made, despite the rent eating into his future home-buying budget.

"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.

Mr Wicks cited family tensions at home as a key reason to move.

"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 flat in River Valley rented from Singapore-based co-living operator Cove.

Cove co-founder Sophie Jokelson said the firm has seen a significant increase in demand for co-living space, with Singaporeans and PRs making up at least 35 per cent of its tenants as at June. Singles make up 88 per cent of the tenants.

NUS real estate adjunct associate professor Steven Choo said renting, whether to wait for a BTO flat or to escape the tensions of living with parents, is 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 work-from-home era and the rush for housing," he said.

"Ultimately, when the property market stabilises, many will find that home ownership is in Singaporeans' DNA."