More young buyers purchasing private condos as their first home

Data reveals that approximately 30% of new private home buyers are aged 35 and below, up from 20% five years ago.

Private properties have become increasingly popular among younger buyers, as they offer greater flexibility and fewer restrictions compared to HDB flats or Executive Condominiums (ECs).

Moreover, the potential capital appreciation from selling a private home is generally higher than that of an HDB flat. Between 2009 and the second quarter of 2024, private non-landed home prices in the Outside Central Region (OCR) appreciated by 149.1%, compared to an 87.9% increase in HDB resale prices.

According to figures from the Department of Statistics, the number of young residents (under 35) living in private residential properties has risen steadily since 2011.

In 2023, there were 380,459 private property residents under 35, up from 375,651 in 2022.

The appeal of condo facilities, lifestyle, and exclusivity, alongside the investment opportunities offered by private residential properties, act as compelling pull factors for the younger demographic.

Can young buyers afford to upgrade to a private condo?

In the first half of 2024, housing affordability improved relative to median household income. In 2023, the median monthly household income was $10,689. With incomes rising among the younger generation, owning a private home is an achievable aspiration.

For young buyers looking to enter the private market with a typical budget of around $1.2 million to $2 million, a two-bedroom unit is within reach. By setting aside at least $10,000 to $20,000 each year over approximately five years, coupled with their CPF savings, they should accumulate sufficient funds to cover the initial downpayment for a private property.

Those with additional cash reserves, financial assistance from parents, or proceeds from the sale of an existing home will find it even easier to afford a private condominium.

Nevertheless, young buyers should be careful not to overspend on property while underestimating other living costs, especially those with children who must budget for childcare and related expenses. Most importantly, one should always buy within one's means and avoid over-leveraging to prevent the financial strain of excessive debt.