About 36% of 1,250 HDB owners polled by PropNex say that they will never be able to afford a private home. (Picture: Samuel Isaac Chua/The Edge Singapore)
More than a third of home buyers surveyed by PropNex Realty feel that they are priced out of the private housing market, and this group believe that they will never be able to afford private housing in Singapore.
This is one of the key findings of a survey of 1,250 existing HDB homeowners published on July 22 by real estate agency PropNex Realty. The survey covered these homeowners’ attitudes towards upgrading from public housing, sentiments on housing prices, and their views towards upgrading into the private residential market.
Close to 450 (36%) of survey respondents indicate that they will never be able to afford a private home, while 225 (18%) of survey respondents believe it would take them 5–10 years to afford a private home. Meanwhile, 125 (10%) say that it would take them more than 10 years before they could afford to upgrade.
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Only 75 (6%) respondents say that they could upgrade to a private home in the next 12 months.
Affordability aside, close to half of respondents indicate that they still aspire to upgrade from their existing public housing to either a larger HDB flat, or to a larger private residential property.
According to the survey, 263 (21%) indicate that they hope to move into a larger HDB flat, while 338 (27%) hope to move into a larger private residential home in the future. Meanwhile, 38% say they have no immediate plans to move and 8% say they plan to “right-size” to a smaller home.
“It is fair to say that HDB flats are a staple of housing in Singapore and will continue to be home to the majority of the population. That said, we know that one of the aspirations of many Singaporean households is to own and live in a private home,” says Ismail Gafoor, CEO of PropNex Realty.
The PropNex survey highlights that high home prices and the prevailing additional buyer’s stamp duty (ABSD) regime are the main hurdles preventing most HDB homeowners from upgrading into the private housing market.
Under the prevailing ABSD system, HDB upgraders need to fork out a 20% ABSD upfront (being their second residential property) before they can apply for an ABSD remission, which is still subject to them meeting the remission conditions.
“To this end, perhaps the government can consider aligning the ABSD treatment for flat owners wishing to upgrade to a private home, with that of those looking to purchase new executive condos (ECs) from developers,” says Gafoor.
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At the moment, HDB owners upgrading to an EC do not need to fork out the large ABSD payment upfront. They are allowed to live in their existing flat, but are required to sell their HDB flat six months after their new EC receives its temporary occupation permit (TOP).
Separately, close to two-thirds of survey respondents say that high private home prices have deterred them from upgrading.
According to the latest housing data released by URA, private residential home prices have climbed for seven consecutive years since 2017, rising by about 51% cumulatively from 1Q2017 to 2Q2024.
More than a quarter (26%) of the survey respondents say that the prices of new private residential project launches are extremely unaffordable, while 42% feel that these new launch projects are unaffordable. The remainder are split between neutral (25%), affordable (7%) and extremely affordable (0.4%).
“Given their views that private homes are much pricier, a larger proportion of the respondents said that their next preferred housing type — should they relocate — will be public housing,” says Wong Siew Ying, head of research and content at PropNex.
Wong says that the preference to pick a larger HDB flat to upgrade also influences the housing budget that the polled homeowners have set aside.
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According to the survey, about six in 10 (62%) of the respondents indicate that they have a projected housing budget of less than $1 million, while 21% say their housing budget ranges from $1 million to $1.5 million. Meanwhile, 10% have a housing budget that ranges from $1.5 million to $2 million, and the remainder have set aside more than $2 million.
“At these levels, it would seem that many of those polled may be priced out of the private housing market,” says Wong.
Transaction data indicates that over the first six months of this year, the average price of new non-landed private residential units in the suburbs, or Outside Central Region (OCR), was about $1.9 million, while that of resale non-landed private units in the OCR over the same period was about $1.5 million.
In the HDB resale market, the average price of a five-room flat in 1H2024 was about $714,000, while the average resale price of a four-room flat was about $609,000 and executive flats fetched around $861,000. “HDB resale flats may be seen as more affordable options over private homes for some HDB flat owners looking to relocate,” says Wong.
Concerns over the high replacement costs to upgrade to a new home have also resulted in more than half of the polled homeowners saying that they are not open to selling their flat at a discount to the market price in their area.
At the same time, 87% say that they expect to sell their property at a price premium over the market rate in their area.
Wong says that the results of the PropNex survey imply that most HDB homeowners view their flat as a home and are generally in no hurry to sell. “Close to three quarters (74% of survey respondents) either agree or strongly agree that their present HDB flat meets their housing needs adequately,” she says.
Most respondents view their HDB flat as a roof over their head, a retirement nest egg asset, and an investment tool to help build wealth. Far fewer view it as a legacy asset or a store of wealth, which is largely attributed to the negative price impact of the lease decay on property value over the long term, she says.
“Home buyers generally remain cautious and price-conscious amid elevated interest rates and peaking home prices,” says Wong, but she adds that the private residential market could see overall private home prices climb by 4%–5% this year.
The survey also reveals that most HDB homeowners are turning to more affordable homes in the secondary public housing market.
PropNex expects that this level of healthy demand for resale HDB homes will cause HDB resale prices to climb by 6%–7% this year.
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