ERA Daily Research - 3 May

Flexible workspace demand rises amid recovering economy in Singapore 

The Straits Times, 3 May 2021, Mon 

By Choo Yun Ting 

SINGAPORE - Demand for co-working spaces in Singapore has increased markedly in recent months with signs of economic rebound and more people back at work in the office. 

International Workplace Group (IWG), which has 24 locations across its co-working space brands here, noted that occupancy of its space in the Central Business District shot up 28 per cent in December and January from previous months after the announcement of phase three of the reopening of the economy. 

Membership has surged 40 per cent compared with pre-pandemic days, said IWG country manager for Singapore and Hong Kong Paul MacAndrew. 

WeWork said its membership rose 20 per cent from January to last month. It also recorded a 30 per cent rise in members using their co-working spaces after the announcement last month that up to 75 per cent of workers could return to their desks from April 5. 

The recent rise of Covid-19 cases in the community, however, led to the call last Friday for employers to allow staff to work from home if possible. 

Any tightening of regulations would affect the use of co-working spaces, though it is too early to say how much they will be affected. 

Much of the demand, though, for co-working spaces is driven by business optimism and companies turning to more flexible work arrangements, observers said. 

Leasing queries at CapitaLand's flexible-working space Bridge+, which has two centres, have climbed with improved business sentiment. 

Mr Chew Peet Mun, managing director for workspace and residential at CapitaLand Singapore, said new members at its Robinson Road space include blockchain accelerator Tribe, UOB's innovation accelerator The FinLab and fintech BondEvalue. 

"As the economy improves, and companies have a greater appreciation for business continuity and operational resiliency, we remain optimistic about the demand for flexible workspaces at Bridge+," he said. 

Mr Brandon Chia, JustCo's vice-president and head of Singapore and Indonesia, noted that there has been greater demand for options in suburban neighbourhoods, which can help businesses decentralise their operations and facilitate remote working. 

Its recently opened sites in Tampines and one-north could capitalise on such opportunities, he added. 

"We are receiving slightly more inquiries, with clients telling us that the length of leases is not as important as the flexibility to upsize or right-size their office space as needed. 

"This flexibility is what traditional office leases lack," he said. 

Demand for co-working space has been higher in sectors such as healthcare, education, e-commerce, e-sports and financial services. 

Standard Chartered Bank signed a global deal with IWG in January that allows employees access to the latter's 3,500 offices worldwide. 

Ms Charlotte Thng, the bank's head of human resources for Singapore, Australia and Asean markets, said it started piloting a programme on April 1, in which 80 per cent of its 10,000 staff here have more flexible work arrangements. 

The IWG partnership that allows the use of co-working spaces is part of the flexible work initiatives, which include logging in from home, she said. 

"Our employees in Singapore can choose to utilise this service occasionally, should their current home environment be unconducive for work and if their job role allows them to do so," Ms Thng added. 

Tech firm Affinidi has doubled its presence within WeWork spaces in under a year, the latter noted, adding that government agencies have also contributed to its growing membership. 

WeWork is tracking "interest from enterprises in exploring hybrid and flexible workplace arrangements, as they continue to expand and establish regional hubs in Singapore", said Mr Samit Chopra, its managing director of international strategy and operations. 

Prospects ahead 

Analysts said they are bullish about demand for flexible workspaces, with the economy improving in Singapore. 

Ms Tay Huey Ying, head of research and consultancy at JLL Singapore, said: "(Strengthened demand) will be underpinned by demand from occupiers who gave up some or all of their traditional office leases in 2020 due to the Government's work-from-home mandate." 

She noted that these businesses are now "looking for a quick and flexible set-up to restart their physical office which they regard as still central for collaboration, creativity and culture building". 

Commercial occupiers whose leases are expiring could also be attracted to explore locating fully or partially in flexible workspaces to stay agile, given lingering uncertainties around the pandemic, she added. 

In the medium term, the flexible workspace industry "would benefit from the growing trend towards hybrid work ecosystems". 

In a recent statement, Savills Singapore executive director for commercial leasing Ashley Swan noted that demand for co-working space had recovered steadily in the country as workplace restrictions eased and more multinational corporations considered a flexible working approach. 

"From the operators' perspective, management contracts have become the preference as they look to continue expanding not only locally, but also regionally," he said. 

JustCo, which opened nine new centres here and in other regional cities in the past year, is looking to expand further, with fresh locations in Singapore, Japan and other markets in the pipeline. 

IWG's Mr MacAndrew said the flexible workspace model serves as a balance between the traditional office and working from home. 

"Going forward, we do foresee a reorganisation of commercial space to meet the new way of work, and we anticipate that the demand for flexible workspace options will certainly continue to increase," he added. 


S'pore's outlook brighter this year, global recession less protracted than initially feared: PM Lee 

The Straits Times, 30 Apr 2021, Fri  

By Calvin Yang 

SINGAPORE - The outlook for Singapore has brightened considerably compared with a year ago, with the global recession turning out to be less protracted than initially feared, said Prime Minister Lee Hsien Loong on Friday (April 30). 

External trends support the Republic's economic recovery and justify confidence in its prospects, he noted in his May Day message to workers. 

While Europe is still struggling with fresh waves of Covid-19 cases, the United States is expected to make a strong recovery this year on the back of a large stimulus package and good progress in vaccinating its population. 

China's economy is also doing well, with hardly any cases in the country. 

Back home, Singapore's unemployment rate is gradually coming down, PM Lee pointed out, and gross domestic product growth this year is likely to exceed 6 per cent, barring a setback to the global economy. This is beyond the 4 per cent to 6 per cent growth the Ministry of Trade and Industry had earlier forecast. 

"This will bring us back to where we were before Covid-19 struck," he said. 

Beyond this year, new opportunities are opening up, with the pandemic accelerating trends such as digitalisation, automation and sustainability across all sectors, said PM Lee, touching on the need to transform the economy for a different, post-Covid-19 world. 

The Emerging Stronger Taskforce, set up to guide Singapore's economic recovery from the pandemic, has been busy working on this transformation. 

PM Lee said: "Our workforce is becoming more diverse. Freelancers, entrepreneurs, mature workers and fresh graduates all face different employment challenges. Each group needs customised policies and solutions." 

He highlighted how the National Trades Union Congress - which is celebrating its 60th anniversary this year - has formed more than 600 company training committees to work with firms to identify capability gaps, co-create new jobs and train workers. 

PM Lee commended the labour movement for maintaining its collaborative stance through the Covid-19 crisis. 

"It persuaded workers to sacrifice today for the promise of a better tomorrow. Without this spirit of fighting Covid-19 together and never-say-die, we would not have come through our worst downturn since independence so lightly," he added. 

Last year, when job losses became unavoidable, the unions ensured that retrenchments were carried out fairly and responsibly, PM Lee noted. 

The NTUC's Job Security Council directly helped more than 28,000 workers find new jobs, as well as offered financial help through the NTUC Care Fund (Covid-19). NTUC also partnered the Government to implement the Self-Employed Person Income Relief Scheme, extending a crucial lifeline to the self-employed. 

In his speech, PM Lee also touched on how Singapore's model of trade unionism and tripartism has been criticised, especially in the West. 

"We have no reason to be defensive. Trade union membership has steadily declined in most Western societies. By contrast, union membership has risen consistently in Singapore, by dint of deliberate policy and unremitting effort," he said. 

The labour movement has since grown from strength to strength, he said. "The verdict of history is clear: Tripartism and cooperation have been far more effective in securing workers' welfare and livelihoods than militancy and conflict." 

Singapore's journey from Third World to First was not all smooth sailing, with the country facing many storms such as the 1973 oil crisis, the country's first major recession in 1985, and the severe acute respiratory syndrome, or Sars, outbreak in 2003. 

"Each time, our tripartite model saw us through. Workers tightened belts, made sacrifices, and accepted pay cuts. Employers shared in the sacrifices, and did their best to save as many jobs as possible," said PM Lee, adding that the Government also offered its support to businesses and workers. 

He said the guiding principle of tripartism has always been to stay united and progress together. 

"This May Day, let us recommit ourselves to strengthening this partnership, and building a brighter future for Singapore for the next 60 years and beyond," said PM Lee. 


DBS to cut office space by 20% in next few years: CEO  

The Straits Times, 30 Apr 2021, Fri 

By Prisca Ang 

SINGAPORE - DBS Group will cut office space across its markets by 20 per cent in the next four to five years as it adopts a hybrid work model and redesigns its work spaces to encourage more collaboration, chief executive Piyush Gupta said on Friday (April 30). 

South-east Asia's largest lender plans to give up about 2½ floors, or 75,000 sq ft, out of the dozen floors it occupies in Tower 3 of the Marina Bay Financial Centre in December, Bloomberg reported earlier this month. 

DBS is also reportedly surrendering some floors in Swire Properties' One Island East tower in Hong Kong's Quarry Bay. 

Mr Gupta confirmed at Friday's media briefing on the bank's first-quarter results that DBS is reducing its physical footprint in Singapore and Hong Kong. 

DBS announced last year that it will allow staff to work from home for up to 40 per cent of the time. 

"We are reshaping our offices to promote more participation and collaboration, but we will see some reduction (of space)," said Mr Gupta on Friday. 

Citigroup is giving up three floors in Asia Square Tower 1, while Mizuho is cutting space equivalent to less than one floor in Asia Square Tower 2.  

DBS posted a 72 per cent jump in first-quarter earnings as business forged ahead on all fronts with faster loan growth and record fee income. Net profit for the three months to end-March rose to $2.01 billion from $1.17 billion a year ago - the first time quarterly earnings crossed the $2 billion mark and the first growth in more than a year. 

Mr Gupta said the Covid-19 pandemic has presented opportunities for DBS to reposition itself and seize opportunities for the future. 

It sees opportunities to grow its stake in Shenzhen Rural Commercial Bank as the Chinese lender eyes overseas markets to serve customers in areas such as international trade and foreign exchange. 

DBS recently agreed to buy a 13 per cent stake in the privately owned lender for 5.29 billion yuan (S$1.09 billion) as part of its plan to accelerate its expansion in China's Greater Bay Area. 

"Some of the (Shenzhen Rural Commercial Bank) customers are getting to the stage where they want to do IPOs (initial public offerings) and increase their capabilities. The bank is very keen to start digitalising and that's one of the reasons they find us an attractive partner. We bring digital capabilities, international presence and some capital markets capability," said Mr Gupta, who noted that the Chinese bank is an "attractive economic investment" with strong compound annual growth rate, return on equity and capital adequacy. 

Asked if DBS is keen to acquire assets Citi is giving up in Asia, he said the bank is open to looking at those that could be incremental to its franchise, especially in countries where it has an existing presence. 

"The process hasn't started yet and in due time, we will take a look at those assets. I also want to hasten to add, though, that we're very disciplined. The economics must make sense, we must make sure we have the capacity to be able to do it... if it winds up to be a bidding frenzy, you might not see us in the middle of that," said Mr Gupta. 

Besides creating new lines of business, DBS will also continue leveraging its technology capabilities, he added. 

"I'm convinced that a big opportunity is to be part of the new digital infrastructure that are going to come into place as the world progresses into digital trends." 

DBS will issue security tokens and extend trading hours to 24/7 on its Digital Exchange in the coming months. 

It is also actively looking to bring in more banks so a wider range of currencies will be part of the new blockchain-based platform Partior - a collaboration between the bank, JPMorgan and Temasek. 

"If we can do that, then that will essentially give us the ability to be an important part of an infrastructure that could actually be game-changing for the way payments happen." 


The Big Read: Rising prices, building delays — young couples face perfect storm in quest for home sweet home

TODAYOnline, 1 May 2021, Sat

By Wong Pei Ting

SINGAPORE — Fang (not her real name), 30, used to be able to put up with living at her in-laws’ place, where she and her husband have been staying since 2019 while waiting for her Build-To-Order (BTO) flat in Punggol which was supposed to be ready by this year. Not anymore.

Having to work from home like many others after Covid-19 struck last year, the manager saw her productivity plummet as she had to talk to her clients and conduct video-conferencing calls from the kitchen of the four-room Housing and Development Board (HDB) flat.

And no matter how hard Ms Fang tried to be extra mindful of the needs of her in-laws, who were themselves working via teleconferencing, she noticed tension between her and the elders building up over the months.

Soon, she found herself shuttling between living at her in-laws’ place in Punggol and her parents’ Farrer Park three-room flat to preserve everyone’s sanity — only to have the sight of the seven to eight boxes cluttering her room serve as a reminder of an unfulfilled dream.

They contained items such as kitchenware and tupperware which she had bought pre-pandemic, thinking that her marital flat could be ready earlier than expected. After all, it is not uncommon to hear of homeowners collecting their key up to a year ahead of schedule.

But it was not to be. She is now expecting her flat to be delayed by a year.

Ms Fang’s split-living arrangement inevitably means that she and her 30-year-old husband will have to spend some nights alone, as he prefers to stay at his parents’ home since it is nearer to his workplace.

“I believe our plans to have children would have to be pushed back,” she lamented.

The newly-weds are not the only ones in Singapore whose plans have been derailed due to a pandemic-induced delay in getting keys to their dream flats.

More than 40,000 households waiting for their BTO flats are now in the same boat, as the construction sector — already struggling to clear a huge backlog after restrictions to ease the virus’ spread eased — continues to grapple with global supply chain disruptions and manpower shortages.

In pre-pandemic days, prospective homeowners were waiting for about three to four years following a new launch for a flat under the BTO scheme — often regarded as the Government’s primary lever to provide affordable homes to those wishing to start a family.

Now, they will have to add between six and nine months, or even a year in some cases, to the waiting game.

The delays couldn’t have come at a worse time for young couples eager to set up their very first marital home.

The buoyant housing market — which seems to care little for the economic havoc caused by Covid-19 — means that other options, such as buying a resale HDB flat, are slipping from their reach.

HDB resale prices had shot up by 8.1 per cent following four consecutive quarters of increases in the past year, and are currently just 4.8 per cent below the last peak in 2013.

In the private market, prices are at a historic high, making apartments or houses in the sector even more inaccessible to many young couples. Prices jumped 3.3 per cent in the first three months of the year, marking the steepest quarterly increase since the second quarter of 2018.

Even the rental market cannot provide much reprieve, as couples find it increasingly expensive to rent flats.

Based on March’s flash data from real estate portal SRX, condo rents are 2.4 per cent higher than in March last year after climbing three months in a row, while HDB rents are 3.4 per cent higher over the same period, having risen for nine consecutive months.

This perfect storm in the housing market, said analysts, is driven by BTO construction delays, the low interest rate environment which has persisted amid the global economic slowdown; and rising demand from foreign investors, backed by the prospects of further price growth and an improving leasing environment.

As these factors are likely to persist for some time, some analysts are predicting that private residential prices will chalk up 4 to 10 per cent gains in the full year, while HDB resale prices are expected to rise by 5 to 9 per cent.

The situation is not unique to Singapore, with countries such as Australia and the United States also experiencing a housing boom, due to a combination of various factors including those related to the pandemic.


With the “perfect storm” unlikely to blow over anytime soon, some couples who are planning to get married or starting a family have had to go back to the drawing board.

Due to the delay in BTO delivery dates, some said that they had to delay their wedding plans to around the time when their flats would be ready.

Others have decided to delay parenthood, while some like 30-year-old Abdul Aliff have no choice but to welcome a new member of the family before their “nest” is ready.

The freelance technician, whose wife is expecting their first child, is currently renting a one-bedroom apartment in Punggol for S$600 from his elder brother.

He had initially wanted to have a child only after he and his 28-year-old wife moved into their BTO flat in Sengkang — which might still have been possible if not for the construction delays — but “God has better plans”, he quipped.

Still, the one-room flat is too small for a family of three. They could only buy travel cots or foldable cribs as there isn’t enough space for a proper crib. It would also be easier to move when they get the keys to their own place by the second quarter of 2023, he said.

“Everything we’re getting for the baby is either the mini version or something that we can easily pack in a box and shift,” he said.

For those who have opted to continue renting while they wait for their delayed BTO flats, it means having to fork out more than what they had originally budgeted.

Take the case of a 28-year-old civil servant who declined to be named. She and her husband got married in 2019 and decided to rent at a prime location, thinking that it would only take two years at most, with the expectation that their BTO flat would be ready by June this year.

But when it was confirmed that their BTO development at Punggol’s Waterway Sunrise II — which required a change of contractors — would be delayed by a year, they had to break the lease for their Holland Village unit and move into a cheaper rental flat in Punggol to save money.

“If we had continued to rent at the original location and paid a higher rent, it would be much more difficult for us to save up for the HDB in the future. In a sense, we are burning more of our savings,” she said.

Mr Justin Ong, 28, a sales and leasing manager, and Ms Jen Lee, 29, a customer success manager, are also planning to rent from the middle of next year, after realising that their BTO flat in Kallang is going to be delayed for nine months, till May 2023.

Since they would not be able to immediately move into their new home after getting married in December next year, the couple felt they could take the time to learn to live with one another before tying the knot, then continuing with this living arrangement after marriage.

But given the current market conditions and the S$2,000 budget for monthly rent, they foresee having to recalibrate their expectations — from a one-bedroom apartment in a mature estate to one at a non-central part of Singapore.

“S$2,000 is not a realistic budget for an accessible area. Those units are going at around S$2,800, or even more than that. Prices now are quite expensive for anything that is decently located, with decent furniture and decent interiors,” said Ms Lee.

Like the 28-year-old civil servant, Mr Ong and Ms Lee are wary of renting for too long as well, pointing out that a year of renting with their S$2,000 monthly budget could have gone towards covering half the renovation cost for their eventual home.

“The money is going to the landlord, not a downpayment to our own property, our own assets,” said Mr Ong.

Earlier in April, in giving an update that about 43,000 households were affected by construction delays as of end February, National Development Minister Desmond Lee told Parliament that those who are unable to find alternative housing arrangements with family members, relatives or on the open market in the interim may contact HDB for assistance.

Around 240 households were helped with Interim Rental Housing flats, which are public rental flats offered to those with financial difficulties.

For those who can afford to pay more or want a bigger rental flat, they can apply for one under the Parenthood Provisional Housing Scheme (PPHS), which are primarily vacated flats from HDB’s past Selective En Bloc Redevelopment Scheme exercises.

Rental rates for PPHS flats are based on their locations and type. They range from S$400 for a two-room flat in Canberra, Marsiling or Woodlands to $$1,500 for a four-room flat in Tiong Bahru, but they don’t come furnished.

Mr Lee said that HDB received 2,350 applications to rent a flat under this scheme last year.

Of these, 66 per cent came from married couples; 31 per cent from couples under the fiancé/fiancée scheme; and the remaining 3 per cent were from applicants who were divorced or widowed with children.


While the HDB resale market offers a faster way for many young couples to get a flat, some lamented that they are not able to find a unit with the “right attributes” to set up a family, as the prices of such flats have ballooned beyond their budgets.

Graphic artist Mark Yong, 28, for example, had set aside a S$470,000 budget for a five-room HDB flat in Sengkang that is within walking distance from an MRT station.

While his friend managed to snag one of these units on the mid-floor for S$460,000 in the middle of last year, Mr Yong, who proposed to his girlfriend last month, is now looking at resale units costing at least S$500,000, even though some of them are on low floors.

He has decided to wait for the market to cool down in the next one to two years before buying a flat — which means that he and his girlfriend would not be able to get their own house in time for their wedding in August.

In the meantime, they will live with other tenants at his parents’ five-room flat, which is being rented out.

He does not rule out the possibility of falling back on BTOs, but a lead time of five to six years would disrupt his plans to have three children by the time he turns 35.

“It would be quite terrible to have kids and then move,” he said.

Communications consultant Ho Xiu Xian, 28, and her fiancé, filmmaker Jun Chong, 30, felt that a lot of their housing decisions had been “compromised and affected” due to the rising costs of flats.

They are hoping to live near either of their parents in Tiong Bahru and Bishan, which are prime areas.

“Should we wish to stay in these locations, we would have to be prepared to compromise and settle for a smaller flat. However, this will not be an ideal solution, especially if we plan to have children,” Ms Ho said.

A 27-year-old engineer, who only wanted to be known as Maegan, said the uncertainty surrounding whether her BTO flat, which was slated for completion in 2024, would be delayed has made it hard to plan having a family and budget for the next few years.

Most of her friends are not considering a BTO unit at all and going straight for resale flats, she said.

However, the cash outlay can be too high for young couples in the current resale market, given that cash over valuation (COV) has begun to rise after staying suppressed for years.

Property experts told TODAY that recent COV figures typically range between S$10,000 and S$50,000. However, it is not unheard of for someone to pay between S$100,000 and S$200,000 for choice flats.

Fresh graduate Vishaljit Singh Sandhu, 27, who is currently looking for a job, suggested waiving the COV’s cash requirement for first-time buyers, so they can service the amount by mortgage instead.

He was hit with a S$40,000 COV for his recent S$425,000 four-room flat purchase with his 25-year-old fiancée, and was only able to pay the amount in cash due to his late father’s insurance claims. The flat is located opposite Admiralty MRT Station at Woodlands Ring Road.


If young couples are finding it increasingly hard to get an affordable public flat which meets all their criteria, would getting a home in the private property market — which has also been hit by building delays and is facing renewed interest from foreign investors — be even more of a pipe dream in the current climate?

Mr Alan Cheong, executive director of the research and consultancy team at real estate firm Savills Singapore, said it is still possible for an average 30-year-old couple to buy a condo — if they don’t mind staying in a smaller condo unit compared to a HDB flat.

They would most likely also need to have a combined income of at least S$12,000, and have well-heeled parents who could support their condo’s hefty 25-per-cent down payment, which could easily amount to S$300,000 for a S$1.2 million unit, he added.

Indeed, a couple in their early 30s — a lawyer and an office administrator who both declined to be named — said they would only be able to afford to buy a two-bedroom condominium in the city fringe with their parents’ financial support.

The couple started looking for a condo that costs between S$1.2 million and $1.5 million last month, since their parents were willing to help pay part of the “painful and very big” down payment first while they slowly repay them in the future. They are comfortable with the mortgage due to their combined income of more than S$15,000.

A 29-year-old founder of a local start-up in the agricultural sector, however, said that she has yet to find a suitable small private home after a three-year search.

The woman, who wanted to be known only as Ms Foo, feels that her budget of S$1.6 million to S$1.7 million is midrange. She had expected to snag a freehold two-bedder that costs S$1,700 per square foot (psf) either in District 10, 11 or 15 with her budget, but such units are out of her reach.

“I can find a random two-bedder, but to find a freehold place that is decently comfortable is very challenging,” she said.

Ms Hoong Huifang, 31, who is currently looking to buy a private apartment with her husband, wants a house that is close to where their parents live, in the Core Central Region.

However, most of the new condo launches around the area are in the S$2,000 psf range, and older condos at least the size of a four-room BTO are priced at around S$1.5 million.

“Of course, another option would be to live further away from our parents as houses would be more affordable in those areas, but proximity is a priority for us,” she said.

A Singaporean-foreigner couple interviewed is also caught in a bind.

After renting a S$3,200-a-month flat here for four years, a 37-year-old manager, who wanted to be known only as Anna, said she and her American husband started contemplating buying a house last November. Her husband, also 37, is an IT consultant on an employment pass.

But the couple with a combined income of more than S$14,000 recently decided to give up on the idea of getting a HDB resale flat or a condo.

Although they could technically afford a S$750,000 HDB flat in Rochor, which they were eyeing, they could not get enough of its upfront cost covered, given that banks are compelled to assess their ability to service the mortgage solely based on the salary of the Singaporean, Anna’s in this case.

“Under one salary, the quantum that we can borrow from the bank is really low. It’s so pathetic that we almost cannot afford a resale HDB unless we go to Chua Chu Kang and buy a three- or four-room flat,” the mother of a two-year-old told TODAY.

They then turned to the private market hoping to get a two-bedroom condo for about S$1.2 million, but they soon realised that the ones in Chua Chu Kang are costing S$1.4 million to S$1.5 million. Even worse, they would be subjected to a 25-per-cent down payment.

The requirement kicked in when the last round of market cooling measures were implemented in July 2018, which revised the sum that buyers could borrow from a bank to finance their home loan from 80 per cent of the purchase price or property value to 75 per cent.

Of the remaining 25 per cent, 5 per cent must be paid in cash, while the remaining 20 per cent can be paid using a combination of cash or savings from the buyers’ Central Provident Fund (CPF) Ordinary Account.

That, plus legal fees, stamp duties and renovation costs, would “wipe out” all their savings, Anna said.


Mr Lee, the National Development Minister, had said in January that the Government is monitoring developments in the property market “very closely” and will adjust policies if necessarily, to maintain a stable and sustainable property market for all Singaporeans.

But as private home prices hit new highs and HDB resale prices continue to rise, some homeowners or potential homebuyers TODAY interviewed believe that the time is ripe for some government intervention to help them afford their first flats.

Ms Ho said: “If the costs continue to rise without certain aggressive measures to help first-time home owners, home ownership will gradually skew towards the privileged, and young couples like us will find it extremely strained to continue to pay off the flat.”

In assessing the affordability of home ownership, property experts told TODAY that one indicator is the median price to income ratio.

The Business Times did such an analysis last month and found that the gap between prices of new condominiums sold and household income was at its widest in a decade, at 15.4 last year.

This means that a household, without spending on anything else, has to save for at least 15.4 years in order to afford the new condo unit.

The ratio for resale condominiums stood at 11.2, while the ratio for HDB resale flats was 3.9.

Professor Sing Tien Foo, director at the National University of Singapore’s (NUS) Institute of Real Estate and Urban Studies (IREUS), said BTO flats are relatively affordable if the ratio could be kept at around four to six times before subsidies for couples with a household monthly income of around S$5,000 to S$7,000.

With the rising prices in the HDB resale market, he expects the ratio to stretch to around eight to 10. The ratio could be stretched to as high as around 14 to 15 times for private non-landed houses, if median income has not increased in tandem, he added.

“Many low and median-income young couples are likely priced out of the private markets at these levels, where they need to save 14 to 15 years, without setting aside for other expenses, to purchase the private housing,” Prof Sing said.

Associate Professor of Urban Planning Lee Kwan Ok at NUS said Singapore’s ratio in the public housing space is “actually not very high”, compared to other global cities such as Hong Kong, although its ratios are “definitely getting higher”.

However, the ratio for private homes is one of the highest across the world.

“Because the average income of young people is usually lower, the chance for them to buy private housing would be even smaller,” she said.

The Government should try to keep the ratio in check because if the private housing option is beyond their ability to pay, people with above-average salary may be forced to buy from the HDB resale market, driving up demand and prices, Assoc Prof Lee said.


Even so, Mr Cheong of Savills said he does not think any affirmative action should be taken to help the younger generation buy private properties.

“Ultimately, this will drive up prices even more and create further problems down the road. The best way to get people up the income ladder is to make them relevant to the economy for a longer period of time, like into their 60s.”

He added: “If one enacts policies to assist the young to move up the housing ladder, there will be the attendant asset price inflation problem.

“Also, there is the possibility that any help given to the younger cohorts in the economy may inadvertently end up disadvantaging the middle age to older working population because from the start, the latter group already cannot keep up with the pace and productivity levels of the former.”

The experts said blunt cooling measures would not help, either.

Prof Sing said that while they could dampen the demand from investors or speculators and help stabilise prices, especially in the private residential segment, the correction may cause developers or existing owners to hold back their launches and sales, causing the supply to decline.

This would, in turn, make it hard for young couples to upgrade, he noted.

“Given the current ultra-low interest rate environment, high transaction costs may still not fully eliminate hot money seeking for safe haven in Singapore, if foreign investments continue to pour into local private housing markets,” he added.

Agreeing, Mr Nicholas Mak, ‎ERA’s head of research and consultancy, said further cooling measures would “just be delaying the inevitable”.

The Government has been keeping prices artificially low, he said, citing how over the past decade, incomes had risen and gross domestic product grew faster than the private residential price index.

“The Government could be throwing more rocks on the lid to cool the market temporarily, but underneath, the heat is still there. The pot is going to boil over,” he added.

As to whether it would be a good idea to waive the COV’s cash requirement for first-time buyers, the experts said the move sounds easy to implement, but comes with major ramifications if the market crashes.

Dr Lee Nai Jia, deputy director of IREUS, said such a waiver requires the underwriting institution, such as HDB or banks, to take up more risk, as the collateral worth of the estates that got their COV cash requirement waived would be lower if the market changes.

“You are essentially allowing borrowing above 100 per cent. For the resale market, is that viable?” he said. “If everything tanks, HDB can be bankrupt, throwing a much bigger problem down the road.”

To increase supply in the resale market to counter the effects of BTO construction delays, Dr Lee said HDB can consider reducing the five-year Minimum Occupation Period for new flats to three or four years for the time being.

He added that this would not only increase the pool of HDB flats in the market that people can buy, it would create more competition, resulting in a lowering of COV rates as prices fall.

Assoc Prof Lee Kwan Ok said one possible government action may be to increase property tax for existing homeowners, especially those who own multiple luxurious housing units.

“One simple reason behind the supply-demand gap is because some people own multiple homes,” she said. “The government action should be towards giving more pressure to these people and making them sell their housing in the market, and in turn, increasing supply for young people.”

Dr Sky Seah Kiat Ying, a senior lecturer at NUS’ Department of Real Estate, said it would be useful to see how rising housing prices impacts the distributions of income, housing quality and prices, in order for the Government to understand which segment of the population is underserved.

“It is not just looking at average prices but also looking at who is doing really well versus who is not doing well at the different income percentiles,” she said.

To address immediate needs, Mr Henry Kwek, Member of Parliament for Kebun Baru, had in February proposed building a certain type of HDB flats that can be used as "stock holding" so that young couples with children can live in them while waiting for their BTO flats to be completed.

In the same vein, NUS’ Associate Professor Fu Yuming suggested that the Government’s approach does not always have to be building new homes for sale only.

He pointed out that built-to-rent housing that provides tenure security and attractive shared amenities is getting popular among young people in many countries.

“It expands the diversity of housing opportunities, especially for people facing credit constraints for homeownership. The built-to-rent housing also provides attractive long-term investment opportunities sought after by institutional investors,” he said. 


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