Rightsizing Your Home: What Condo Options Are There for Senior Landed Home Owners?

During his first National Day Rally this year, Prime Minister Lawrence Wong cast a spotlight on housing options with improved infrastructure for Singaporean seniors, highlighting that “there are seniors who prefer not to move” and desire to “age in place, where they currently live”. 

However, some seniors may not be able to preserve their current living arrangements – primarily those who live in landed properties.  

Helping single seniors to right-size

Announced during Budget 2024, Singaporeans aged 55 years and above will be eligible for an ABSD remission on their second residential property should they meet certain conditions. These include disposing their first residential property within six months of purchasing their second home, paying for the ABSD on said second home, among other conditions. For the full list of criteria, see here.

The extension of the Additional Buyer’s Stamp Duty (ABSD) concession to unmarried senior Singapore citizens will generate a greater incentive for single seniors to right-size their homes. 

When considering HDB flats, seniors have to keep in mind that there is a wait of 15 months if they aim to move into a 5-room or larger flat. Thus, a more manageable property could be a 4-room or smaller flat. On the other hand, some may prefer living in a condo for its diverse range of facilities as compared to living in HDB estates as a whole.

While adjustments made to the ABSD seem excessive, an overview of Singapore’s population and housing situation presents a different narrative

Singapore’s ageing population and their housing situation

Like Japan, Monaco and other countries with a declining birth rate and increased life expectancy, Singapore is staring right down the barrel of an aging population. In 2013, the recorded number of Singaporean seniors aged 55 and above was approximately 907,600 individuals; this figure has since ballooned by 31%, reaching 1.3m in 2023. 

Chart 1: Proportion of Seniors Among Singapore Residents

Over the same timeframe, the size of Singapore’s senior population has also risen in tandem with its overall population growth; the former grew by 8%, matching pace with the 7% rise in resident numbers. Given these figures, it is becoming increasingly apparent that there is a growing need to address the diverse demands of Singapore’s aging population and shifting housing needs.

Landed properties being home to a higher proportion of seniors

Additionally, results from ERA’s My Dream Home Survey 2024 have also indicated that seniors make up more than half (52%) the respondents who live in landed homes. This outstrips the number of landed residents from other age groups.

Chart 2: Proportion of Seniors Living in Landed Homes

This highlights the possibility of an influx of seniors choosing to right-size if they are unable to overcome the challenges of living in their landed homes. Another concern that could surface is the progressively reduced mobility, certain seniors will require elderly-friendly facilities, such as installing lifts for the elderly to access upper floors, within their homes to support their needs. 

The addition of maintenance services and elderly-friendly facilities could require seniors to part with a significant amount of their savings, especially for those who have already retired and no longer earn a steady source of income.

When right-sizing, should seniors consider a new condo or a resale condo? 

Older landed homeowners seeking to right-size within their neighbourhood have the option of purchasing a resale condo, instead of a brand-new one.

In fact, some senior right-sizers may even find resale condos to be more attractive for a number of reasons. These include, but aren’t limited to, the more competitive (read: comparatively lower) price points of resale condos and larger floor area.

37% of boomers and seniors want to buy condo as their next home and, more than 60% of them prefer new homes

Among the Seniors and Boomers surveyed in our 'Dream Home Survey,' 37% indicated they are looking to buy a private condo for their next home, and a significant 61% of this subset prioritise condos, far surpassing the preferences of Millennials and Gen Z. This preference likely stems from the appeal of longer leaseholds and greater potential for capital appreciation. 

Pricing of new sale and resale condo units

For many buyers, affordability is a crucial factor that influences their decision in making a purchase. Traditionally, new sale homes command a higher selling price than a resale unit. From 2019 to August 2024, the average price of resale units maintained lower prices than new sale units.

Chart 3: Proportion of Seniors Living in Landed Homes

Moreover, the premium on new sale units has exponentially increased. In the same period, average prices of new sales pulled away from resale units, boosting the price difference of 27% to 42%.

Nevertheless, depending on the buyer’s intentions, the different price points of both new sale and resale units could serve their purpose in meeting the needs of these future homeowners.

New condos make great legacy assets

That said, new condominiums have unique advantages of their own too. For most Singaporeans, remaining leasehold tenure is a major buying consideration – this is especially true for anyone interested in creating a legacy asset. That is also where newly-launched condos excel, offering fresh leases that translate into longer horizons for price growth.

New condos offer a more flexible quality of life 

Finding the right condo unit on the secondary market might be more challenging than picking one in a newly-launched project. Depending on the pool of available units, right-sizers may have fewer opportunities to find their ideal home in an older development. 

In contrast, newly-launched developments typically offer a wider range of options, significantly increasing your chances of finding a dream home that perfectly matches your desired facing, size, layout, and other preferences.

In addition, new condo launches enable seniors to buy homes with their children, i.e. buying two properties in the same project. This allows them to live near enough to easily care for one another while maintaining personal space.

Older condos are usually ready-to-move-in, while new homes require lead time to reach TOP

Buyers of older condo units do not experience as long a waiting time that buyers of new condos are restricted with. Once the resale condo unit has been transferred to the new owners and becomes vacant, buyers are free to move in whenever.

However, buyers of new condo units are required to wait for the project’s development to achieve TOP status before their property is suitable for residence. Depending on when the new sale unit is bought, wait times can range from 2 years to 4 years.

Older condo could require extensive renovations

One notable expense associated with buying older condo is renovation cost. Existing structures of resale units may not exactly fit buyers’ preference, or even be in a good condition due to wear and tear. Buyers are then driven to invest heavily into renovation to meet their standards, Ultimately, all additional expenditures accumulate and buyers incur costs that may not be much lower than purchasing a new sale unit. 

At some locations, it might mean only finding much older condos. For instance, about half of the condo developments around Tagore, Sembawang Hills are more than 20 years old. Furthermore, some older projects with bad maintenance cannot be rectified as these problems are found in communal areas of the development.

Familiarity breeds contempt, but in the case of neighbourhoods, it’s more likely that they’ll breed comfort instead. Being well-acquainted with everything – from the nearest supermarket to the cheapest eateries – in an area will allow you to establish a day-to-day routine that ensures daily life stays pleasantly predictable. 

Notable landed enclaves and demographic profile

This is likely the preferred scenario, not just for you, but also for the thousands of other elderly residents living in planning areas such as Ang Mo Kio, Bukit Panjang, Bukit Batok, Marine Parade, Queenstown or Serangoon. With a diverse portfolio of upcoming developments within these areas (Table 1), seniors do not have to worry about leaving their old lifestyle behind.

To understand where exactly seniors living in landed properties are located at, let’s dissect the various landed enclaves within a few of Singapore’s more densely populated planning areas.

Certain subzones are home to a higher proportion of seniors island-wide (37%), such as Tagore & Sembawang Hills (43%), Lorong Chuan & Serangoon Central (42%) and Hillview (39%) 

Chart 4: Areas with Landed Enclaves

To put it another way, senior homeowners of landed properties living in these subzones have the opportunity to right-size within the same neighbourhood: they simply need to move a new private condominium nearby.

As Chart 4 shows, there are substantial populations of seniors aged 55 and above, who live in the identified planning areas. This is supported by the average of 39% of residential population across the identified planning areas (with a small number living in non-landed private properties) – all of which are also within a 1km radius of an upcoming new private development.

What are their housing options?

For those interested, here’s a list of new developments found in the following areas.

Table 1: Landed Enclaves & Nearby New Developments 

Source: ERApro, ERA Market and Research Intelligence

Is it financially feasible for senior landed homeowners to right-size to a new private condo in 2024?

Looking at historical transaction data for landed properties in the various subzones over the past 15 months, it’s evident that current landed homeowners will have sufficient funding to purchase a new condo within a 1km radius after downsizing. 

Our survey results also showed that 78% of Boomers and Seniors looking to buy a condo have a budget between $1 million and $3 million, which is a comfortable budget for a sizable new home today.

Here are some examples of estimated surplus funds that senior landed homeowners can expect to have after using their sales proceeds to purchase a newly-launched unit within the same subzone:  

Source: ERApro, ERA Market and Research Intelligence 
*Prices of new units are last updated on 22 August 2024

Surprising isn’t it? With their liquidated capital, being able to afford a new condo apartment doesn’t seem as daunting! Comprehensive planning allows for seniors to overcome the difficulties of living in their landed property while quelling financial concerns - the seemingly impossible is made possible so these seniors’ next properties are no longer out of reach! 

So, I have decided to buy a new home, but where do I stay in the meantime? 

For those who are ready to make a change to their living arrangements, congratulations on taking the next step! Now here comes another consideration to think about.

While waiting for your new condo to reach TOP, you might have disposed of your landed home beforehand. To avoid a situation of having no roof over your head, the ideal situation would be to rent a unit nearby. Assuming that your unit will TOP in 2 years, one can expect their expenditure on rent to look something like this:

Table 3: Rental Expenditure by District (24-month period)

Source: URA, ERA Research and Market Intelligence
*Based on median rental in Jan-Aug 2024. 

Even though the rental expense is seemingly high, this could be way more affordable than renovation cost that could balloon to more than $105,000 associated with buying resale properties.

So, what now?

Ultimately, don’t close the doors on living a stress-free life! If you’re losing sleep over your current situation, fear not – you just have to keep in mind the following.

Right-sizing to a smaller home has never been easier for seniors now that this group of individuals has been granted ABSD remissions. Without the presence of taxes to chip away at your finances, there is some wriggle room for flexibility when it comes to budgeting for your next property.

Also, finding a new sale condominium unit becomes a more straightforward process with the capital from your landed sale proceeds. Generally, purchasers are pressured to chart out a financial plan and loan capital to afford for their new property. In this case, seniors can be rest assured that their landed properties can provide them enough purchasing power to right-size.

So, if you're a senior considering downsizing within your neighbourhood while prioritising long-term financial planning and property preferences, a new condominium is worth checking out. To explore your options and make an informed decision, consult with an ERA Trusted Adviser today!