With the ongoing surge in housing demand, many are wondering whether new citizens are the primary drivers behind this phenomenon. Analysts argue that it's not just the influx of fresh citizens but also the increasing number of aging residents that significantly contribute to the escalating demand for housing in the city-state.

Aging Households and Housing Market Dynamics

Senior Minister Lee Hsien Loong revealed during the Teck Ghee Citizenship Ceremony on March 9 that Singapore grants citizenship to approximately 22,000 individuals each year. However, the rising number of older citizens is making a substantial impact on the housing market, with data from EdgeProp Singapore indicating that among those aged 65 and over, 52% head their own households—a telling sign of their influence on housing demand.

Sky Seah, a senior lecturer at the National University of Singapore's Business School, pointed out that as more seniors opt for independent living or accommodate their adult children, their housing needs are evolving. This demographic shift contributes to household formation and inadvertently fuels housing demand.

From 2009 to 2024, the annual increase in households varied significantly, from as low as 200 to as high as 47,100. As a result, household growth averaged around 1.85% per year, highlighting the complex interplay of factors driving the market.

Stable Growth of New Citizens and PRs

According to the Department of Statistics, Singapore welcomed about 25,200 new citizens in 2024, marking a slight increase since previous years. Similarly, new permanent residents also rose to approximately 35,000, reflecting a stable trend over the past 16 years, with a notable dip during the pandemic.

Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield, explained that aspiring citizens typically apply for permanent residency first, which they must hold for at least two years before qualifying for citizenship. This leads many PRs to purchase property shortly after obtaining their status, given that they face a 5% additional buyer’s stamp duty (ABSD) on their first home.

Local Demand Remains Dominant

Recent data indicates a remarkable trend: in February 2024, developer sales reached their highest numbers in 13 years. Local buyers accounted for 92.4% of new home purchases, while PRs represented only 6.9%. This underscores the significant local demand as a driving force in Singapore's real estate market.

With the homeownership rate now at 90.8%, a slight increase from the previous year, it seems that Singaporeans are keen on owning property as a long-term investment amidst fluctuating global markets. Despite this, there are signs of growing affordability issues—particularly for younger households showing decreasing headship rates.

Affordability Challenges Looming Ahead

While the current housing supply may alleviate rent pressures, the demand for property as an investment stays robust due to low unemployment rates and rising household incomes. However, Ms. Seah warns that affordability remains a concern, particularly for younger buyers facing challenges in the competitive market.

Elevated home prices could trigger government intervention through cooling measures if trends continue. The Core Central Region (CCR), traditionally associated with high property prices, has also seen declining foreign participation in non-landed sales since the implementation of a significant ABSD for foreign buyers.

As Singapore navigates this delicate balance between rising demand and affordability challenges, many are left wondering: can the housing market sustain its current trajectory without substantial government intervention?

Stay tuned for updates as this story develops!