A New York Times report carried in The Straits Times last Sunday followed young Americans who have stopped saving for a home. Rising prices and high mortgage rates have pushed buying out of reach, so they are funding retirement accounts, trading apps and index funds instead. In a Pew Research Center survey published in June, 89% of American adults under 40 said it is harder for young people to buy a home today than it was for their parents. Fidelity found Gen Z retirement contributions up 65% on the year, more than double the growth among millennials.
Young Singaporeans feel the same pressure and the same pull towards investing. But the choice in front of them is not the one their American peers face, for three reasons.
The first home is built into the system
Most young Singaporeans buy their first home from HDB rather than the open market. A new flat comes at a subsidised price with grants on top, and first-timers buying resale have grants of their own. The income ceilings that decide who qualifies rose on 24 August, which we covered when it was announced. Our guide to HDB grants sets out who gets what, and the grants checker works out your own figure.
CPF changes the saving as well. Part of every salary goes into the CPF Ordinary Account, which can pay for a home and its loan instalments, and can also be invested under the CPF Investment Scheme within limits. For most young workers a housing fund builds whether or not they plan it.
And the prices a first-timer faces start well below the private market. In the twelve months to August, Roov's HDB records show 4-room flats resold at a median $535,000 in Jurong West, $550,000 in Woodlands, $555,000 in Yishun and Choa Chu Kang, $640,000 in Sengkang and $681,444 in Punggol. Across the island the median 4-room resale was $630,000, and the median 3-room $440,000.
Where the American story does apply
Private property is where Singapore looks more like the Times report. The median private condominium resold for $1,710,000 in the twelve months to August, against $1,370,000 four years earlier, a rise of about 25%. The median price per square foot went from $1,398 to $1,777, about 27%. For a young buyer outside the HDB route, or planning to upgrade later, that is the gap that has widened fastest.
The Times profiled a part-time bartender in Bend, Oregon, where the median home costs about US$700,000, nearly 75% more than two decades ago. Singapore's private market has risen a third as much in a fifth of the time.
Stocks or a home is the wrong question here
For young Singaporeans the useful question is when, and in what order. Investing early and spreading the risk is sound advice anywhere, and nothing here argues against it. But a first flat bought with grants and a subsidised loan, or with CPF savings that would otherwise sit in the Ordinary Account, is not the same bet as an American starter home at American mortgage rates.
Waiting has a cost too. A buyer who holds off for rates to fall does not qualify for a bigger loan, as we explained earlier this month, because the loan limits are tested at a fixed floor rate rather than the rate on offer. Our rent or buy guide sets renting and investing the difference against buying, over the years you plan to stay, and our guide to how much you can borrow explains the limits.
Before either decision, know your own numbers: what you can afford, the stamp duty on a first home, and whether a new flat or a resale one suits your timeline, which our BTO or resale guide sets out.
At the other end of the ladder, older owners are working out how to release what their homes have gained. We looked at what rightsizing frees up this week.