Affording a home feels harder, but data actually says its getting easier?
It is uncommon to hear Singaporeans complaining that it is harder and harder to afford a home, as prices keeps going up, and up.. But the stats says a rather different thing (at least generally on a statistical level). Here’s a chart on the total Singapore household balance sheet.
Financial assets include cash, investments, CPF and life insurance. Surprisingly, it is higher than Property assets, and the gap is widening. That means Singaporeans are now putting more money into stocks, bonds, and other investments, more than into real estate. As of Q3 2024, household financial assets have hit $1.88 trillion, overtaking residential property assets at $1.47 trillion.
At the same time, Mortgage debt remains relatively low at $274.79 billion, meaning people are either borrowing cautiously or paying off their loans faster. So, what does this all mean for property buyers and sellers? Let’s break it down.
Affordability: Is Property Still Out of Reach?
Despite slowing demand, affordability is still a key concern, especially for younger buyers. Home prices have continued to rise, even as financial assets grow. While this suggests strong underlying demand, it also means that owning a home still requires careful financial planning.
However, with mortgage debt staying relatively low, it signals that people aren’t over-leveraging themselves. This could mean more financial prudence, with buyers choosing homes that fit their budget rather than stretching their limits.
But do not bet on huge cooling measure. It could come, if prices soar faster than expected.
Ultimately, LTV is a big factor when it comes to cooling or not. As the data shows, it is not too high, aka people can afford it.
Less FOMO, more choices
The days of “buy now or regret later” may be slowing down. With more people investing in stocks and financial products, the demand for property isn’t as frenzied as before. That’s good news for buyers—you might not have to rush into overpriced homes out of fear that prices will skyrocket overnight.
That said, prime properties in high-demand areas are still holding strong, especially landed homes and luxury condos. But if you’re looking at mass-market condos or resale HDBs, you might find less competition and better negotiating power.
If you’re a first-time buyer, this shift means you have more flexibility. Instead of feeling pressured to jump into the property market, you might consider building up your investments first and buying when the time is right. With financial assets becoming a bigger part of household wealth, it’s clear that real estate is no longer the only ticket to financial security.
A More Balanced Market
Singapore’s wealth landscape is changing. Property is still a valuable asset, but it’s no longer the default way to grow wealth.
The younger generation might have play a bigger part with more focus on investments like stock and crypto.
But do not forget property is a hard asset that can be used for own-stay, at the same time having an appreciation. It’s a must-have alongside other investments 🐱
