Housing bubble imminent? Singapore’s aging population will leave an avalanche of HDB on resale

Singapore has reached a population milestone in 2018, as the total number of senior citizens age 65 and above equals to the number of youths age 15 and below.

As the baby boomer generation ages out, accompanied by the low birth rate causing the shortage of native population. There will be an avalanche of houses left empty, possibly leading to a plummet in housing market valuation.

As stated by law, the house cannot be inherited if the inheritance receiver already owns their own HDB flat. The receiver must either sell their own house or resell the inherited house.

Today, about 80 percent of the Singaporeans live in HDB and 90 percent of them owns it.

Therefore the 90 percent who owns the flat must resell either of their flats, hence the number of resales will escalate exponentially.

In the case whereby there are multiple beneficiaries, the resale value will be split among them as cash.

The population data and mortality rates have shown that the number of senior residents timed to decease will exceed 30,000 per year by 2030, more than 2 times the number in 2016.

Even though the Government can control the number of new flats being pushed out for sale, they will not be able to control the number of resale flats that will flood the market.

The total number of resale flat due to death alone will be at more than 8,000 units, that is 40% of the resale market in 2017.

The population size of baby boomers is more than twice the size of the millennials.

There will never be enough millennial generations to buy up all of the resale flats, that is one fact that we cannot ignore.

The widening of the gap between supply and demand will add significant downward pressure on the resale price.

That coupled with the aging of the 99-year lease, most of the resale flats will be left with 59 years or less, which will decrease the overall market price even further.

There are many possible solutions to this problem, but the most notable one will be to introduce more foreign workers into Singapore.

Singaporeans had never been very accepting of foreigners competing for good jobs locally.

The total number of foreign workers in Singapore as of Jun 2017 was at 1.37 million, after excluding the domestic and construction workforce, will be numbered at 787,000.

The number will likely double over the years to come.

Singaporeans need to embrace the eventual flooding of foreign talents, sooner rather than later.

Economic wise, Singapore cannot afford for good foreign talents to leave.

But they will definitely leave Singapore if they cannot find a good job, just like you will leave if you can’t. Nobody wants to be stuck in a bad job and stagger their lives.

Thus, they will cash out of their Singapore houses and loans to go back to their homeland or other countries for better opportunities with a much cheaper lifestyle.

Take a look out your windows, what do you see? Houses everywhere, both public and private. What do you think will happen if those are being left empty, indefinitely?

If the Government ever let that happen, it will be the first step to a possible collapse of Singapore’s economic as a whole.

Hence leading to the stronger foreign talent policies the Government had been pushing for years but kept being dejected by the Singaporeans.

Even if the foreigners are non-property owners, the property rental demand will plummet drastically when they start to leave, leading to empty flats everywhere, again.

Price of HDB will start dropping due to the economic downturn, causing more people to leave, including the Singaporeans, to migrate overseas for a more stable lifestyle.

Banks will panic as the open market value of HDB falls, impacting the value of their loans dramatically. Margin calls will be made to those they loan it to, leading to those unable to pay up, in bankruptcy.

Many will be left homeless as bank starts to evict homeowners, those with a mortgage will not be evicted, but will still be bankrupt either way.

Above are of course the doomsday scenerios.

Singapore Government will definitely step in to prevent it from happening, we just don’t know how well of a job they can do since the fact of dwindling younger generations will not be changed.

Recruitment of foreign talents will solve many issues that are emerging in Singapore now, and we as Singaporeans have to embrace it no matter what.

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