Singapore’s total fertility rate in 2020 fell to a historic low of 1.1. It drops further below the country’s replacement rate of 2.1. Since babies are conceived nine months earlier, low birth rate is the result of fewer conceptions in 2019.
Under the financial stress of Covid-19 and family conflict from WFH, we might see an even lower fertility rate this year. Delays in weddings and BTO completion dates will in turn affect the birth rate in the following year.
Frankly, if there were no softening of economy in 2019 and no outbreak of Covid-19, do we have the confidence to say we can revert our total fertility rate which has been declining since the 1980s?
Decades of falling birth rate has far-reaching impact in the society. Below are the inevitable consequences in the future:
• Drop in demand for school places and products or services in the children’s market
• Growth in healthcare needs and products or services for the elderly
• A slowing or declining housing market and changing housing needs
• Decline in labor, productivity and the country’s per capita GDP
Impact #1: Drop in demand for school places
Last Wednesday (Apr 7), the Ministry of Education (MOE) announced that another 18 primary and secondary schools will be merged in the next 3 years. Four years earlier in April 2017, MOE already confirmed combining 14 primary schools, six secondary schools and eight junior colleges by 2019. In fact, a total of 68 schools have been merged since 2010.
Singapore is producing fewer babies year by year. These babies will grow up and eventually graduate from kindergartens, primary schools, secondary schools and junior colleges. Singapore will raise retirement age to 63 from 1 July 2022. That implies an MOE teacher can teach for 30 to 40 years.
With less students but the same number of teachers, what will be the employment prospect of the teaching profession in the future?
With fewer babies but more MRT lines and stations, will proximity to good schools still be an important consideration for future homebuyers? Will the presence of schools still be a selling point in future marketing of new condominium projects?
Impact #2: A slowing public housing market
A plunge in birth rate in a particular year is going to affect education and housing in the next six to thirty years because:
• Six years later, less children will register for primary schools.
• After 12 and 14 years, less students will enroll in secondary schools and junior colleges.
• In 25 to 30 years, less citizens will apply for new BTO flats or purchase resale HDB flats (especially in mature estates).
Do the math: According to the Singapore Department of Statistics, the average annual number of resident live births between 2009 and 2018 is about 36,600. Around 60 percent of Singapore residents are married. Assuming these babies grow up and we apply a 60 percent marriage rate, every year there will be at most 10,980 young couples looking to form a new household. But these young couples may choose to apply for new BTO flats or ECs, go for private housing, or continue to stay with parents from either side.
Is it still necessary to continue launching 15,000 new BTO flats every year?
Since 2010, there were 15,000 to 27,000 new BTO flats being launched every year. By now close to 150,000 of these newer flats have passed their Minimum Occupation Period. Homebuyers have higher chance of buying these flats in the open market compared with older flats. These newer flats were bought at higher prices from the Housing Development Board last time and are now selling with a higher value. That is the major reason why HDB resale price indices are higher these days.
It is easy to fall into the trap and under the false impression that the prices of HDB resale flats keep climbing. It doesn’t help with the media’s favorite reports on million-dollar HDB transactions which makes up only less than 1 percent of total transactions.
Fast forward 25 to 30 years later, these BTO flats launched in the 2010s are now being put in the HDB resale market. Owners are downsizing or rightsizing during their empty nest stage. By then, do we have a big enough demand from the young population to absorb the supply from these old HDB flats? What about the even older HDB resale flats from the earlier generations who are passing on?
If owners have difficulties finding buyers for their HDB flats, they cannot upgrade to private homes. Do we have enough demand for the huge supply of private residential properties in the market?
For the last 5 years, Singapore’s total population grew at a slow pace of 0.1 to 1.3 percent. If the low birth rate and controlled immigration are here to stay, the country had better stopped indulging in relentless building of new homes to pretend that there is real market demand for a 6 or 10 million population.
Impact #3: Smaller households and less demand for bigger homes
What are the implications for Singapore’s population trends of more singles, delayed marriages, less babies and more old folks?
In 2019, 2-person resident households are most common which occupies 24 percent of all resident households. In the future, we will see more three-generation households becoming one or two-generation households. Instead of grandparents living with their children and grandchildren, we will see more smaller households that can be singles or widows, married couples with no children, or unmarried children living with their old parents.
More households of smaller sizes will affect the number of bedrooms buyers are looking for in their home purchase. Consider the following in the future:
• For public housing, can we find enough resale flat buyers for 3-generation flats, 5-room or executive flats?
• For private homes, do we still have a big enough market for 4 or 5-bedroom condominium units and landed properties?
I mentioned in my new book that it makes more sense to invest in landed properties. Because it is difficult for developers to overbuild landed homes in Singapore. However, there is also a hidden threat here. If there are more retired or elderly couples selling their landed homes, compared with young families with a few children buying from them, there might be an oversupply of houses in the market in the future.
Impact #4: Growing demand for elderly friendly homes and neighborhood
How serious is the problem of aging population in Singapore?
In 1990, the median age of our population is 29. It goes up to 42 in 2020 and will be 53 in 2050. By 2030, one in four Singaporeans will be aged 65 years and above. Due to longer life expectancy of female, there will be more widows. In 2019, there are already 162,100 residents above the age of 50 who are widowed.
It is common for retirees or people preparing for retirement to consider rightsizing or downsizing their homes. They are also experiencing an empty nest stage at the same time. In the future, we will also see more old couples and the widowed staying alone in large flats or houses. The phenomenon implies more downgrading from houses to apartments, from private homes to public flats, and from larger to smaller HDB flats.
Furthermore, although the media reports that the average income of Singaporeans is on the rise, the number of resident households with zero income has increased every year from 10.4 percent in 2014 to 13.2 percent in 2019. Among them, households with solely non-working persons aged 65 and above have gone up from 5.7 percent in 2014 to 7.9 percent last year.
An aging population is good for the drug companies, but bad for the consumer and housing market.
Besides, we need more elderly-friendly flats and neighborhoods suitable for the living of senior citizens. Besides more two-room flexi BTO flats that will be built in the non-mature towns, what are other housing options for the seniors?
Last year, the government decided not to award the tender for a 30-year-lease dementia care village in Sembawang. The only bid submitted from the market was S$15 million which the government thought is too low.
Housing need of the aged is an important social issue that won’t be solved on its own. It also doesn’t work if we leave it in the hands of developers. Their priorities are maximizing profits and answering to the shareholders, not meeting social needs.
Recommendations by the industry stakeholders
I had high hope when The Business Times said they are coming up with a special weekend feature on “What Singapore’s ageing population could mean for the property market”. But it turns out to be a disappointment.
I was expecting some survey results, or at least some analyses of key data, with conclusions and sound recommendations. The article happens to be a compilation of comments from company spokespersons who “imagine” what the elderly are thinking and property decisions that they are likely to make. Suggestions from some spokespersons prove that their knowledge of the pioneer generation is no better than you and me. The following are some of their interesting suggestions:
1) “A mixed development could include activity-based offerings such as a cooking school or a gym.”
How many of our aging parents go to the gym regularly? Does he mean having a cooking school for the maid?
2) “Some may seek comfort in numbers. by teaming up with a relative, friend or like-minded person to either rent or buy a property together.”
To live with a relative or a friend who is willing to stay with an aged person is ideal. But at this stage of life, how many can find a like-minded person to buy or rent a place to cohabitate?
3) “It would be better for the seniors to lease out their larger homes and then arbitrage by renting a cheaper room in a co-living facility.”
The older we are, the harder for us to make and adapt to new changes. Can you imagine old people having to leave their familiar home and surroundings, and move to a strange place to co-live with other strangers? If co-living space doesn’t appeal to the young here, what makes them think that it will work for the elderly?
Confused by these recommendations by the “experts”? Me too. We have to discuss about how low fertility rate can result in decline in labor, productivity and the country’s per capita GDP in a separate blog post.
If you need advice on property matters or residential properties in Singapore, you can check out my personal consultation service.
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Totally wrong. We have 20 thousand new citizens and 30 over thousand new PRs every year.
Not really. For PRs, there are new approvals but many left Singapore too. From 2015 to 2019, the annual increase/decrease in the total number of Singapore PRs is -42, -3,051, 2,003, -4,272 and 2,922 respectively. The number of citizens, PRs and foreigners from 2012 to 2018 from Singapore Department of Statistics are tabulated in my new book Behind The Scenes of The Property Market Table 5.1 Singapore population growth (2012-2018).
I like your independent thoughts and comments; not swayed by the so called ‘ experts ‘ views much of which always have hidden agenda.
Yes, they are likely to be biased because of vested interests. At times, they may not be ready to make comments but are pressed by the reporters to say something to meet the tight publishing deadline.