Migrants key to Singapore private housing’s long-term health amid low births

[SINGAPORE] Amid wars raging, buyers snapped up 90 per cent of the units – 410 out of 455 in total – at GuocoLand’s River Modern in the River Valley area during the 99-year leasehold condo project’s launch on Mar 7. The average selling price was S$3,266 per square foot.

Aided by low interest rates, housing demand in safe haven Singapore is resilient. Still, while homebuyers appear unfazed by war, should they fear the acute shortage of babies?

In 2025, the resident total fertility rate per female hit a record low of 0.87 based on a preliminary figure. The total fertility rate was 1.24 in 2015, and 0.97 in 2024.

In late February, Deputy Prime Minister Gan Kim Yong said that with birth rates falling at an unprecedented pace, Singapore’s citizen population may start shrinking by the early 2040s without new interventions.

Globally, the replacement rate, namely the level of fertility at which a population replaces itself from one generation to the next without relying on immigration, is estimated at 2.1 births per woman. 

However, even if the resident population does not grow, could the trend of household sizes getting smaller continue to power growth in the number of resident households, which in turn supports housing demand?

Think of fewer multi-generation households and more households comprising elderly couples, young couples and singles. 

The average household size among resident households was 3.06 persons in 2025, down from 3.22 persons in 2020, 3.39 persons in 2015 and 3.5 persons in 2010.

Between 2015 and 2025, the share of resident households with up to two persons rose from 33.1 per cent to 40.5 per cent, while that of five-person and larger resident households fell from 23 per cent to 17 per cent.

However, looking ahead, perhaps the room for the average household size to shrink further is limited.

Ageing population

Indeed, a low birth rate combined with a rapidly ageing population could hit the private housing market particularly hard.

In 2025, one in five citizens was aged 65 or older, compared with one in eight in 2015.

Should the citizen population comprise a larger share of elderly folks and a smaller share of younger adults, there may be fewer people who will upgrade from Housing & Development Board (HDB) flats to private homes.

Typically, people upgrade their homes when their incomes are rising, and they can secure mortgage financing easily. Conversely, many seniors might trade a condo unit for an HDB home to free up funds for retirement needs and enjoy lower recurring costs.

Crucially, if Singapore’s population ages and shrinks, economic and income growth will slow while spending on healthcare and social issues will increase. In such a scenario, weak household income growth coupled with declining confidence in the nation’s economic growth prospects can hurt private housing demand.

The ABSD effect

Certainly, there is room to boost private housing demand from foreigners who are not permanent residents (PRs), as well as Singapore citizens and PRs hoping to buy multiple homes by slashing additional buyer’s stamp duty (ABSD) rates. 

Today, ABSD does not apply to a citizen buying a first home, while a PR first home buyer pays 5 per cent ABSD. A citizen pays 20 per cent ABSD for buying a second home and 30 per cent ABSD on a third and subsequent home. For a PR, the ABSD rates are 30 per cent on a second home and 35 per cent on a third and subsequent home.

A non-PR foreigner buying any home pays 60 per cent ABSD.

However, slashing ABSD rates for foreigners and investors can be tricky. Could such a move introduce heightened volatility in home prices and rile many locals?

More importantly, should weak demographics hurt Singapore’s economic growth and dampen private housing demand from local owner-occupiers, foreigners and investors may not be keen to invest in private homes here even if ABSD rates are cut.

Ultimately, condo leasing demand from skilled foreigners could plummet and capital appreciation of private homes will be muted if the Republic’s economy loses its vitality.

Potential homebuyers

Unless the low birth rate among residents can be dramatically reversed, what is critical for the private housing market’s long-term prospects is whether Singapore welcomes more foreigners to become PRs and citizens.

DPM Gan said that the nation expects to take in about 40,000 PRs and around 25,000 to 30,000 new citizens annually over the next five years. In 2025, the nation granted about 25,000 citizenships and 35,000 permanent residencies. Between 2020 and 2024, the number of citizenships and permanent residencies granted averaged around 21,300 and 33,000 a year, respectively.

At end-June 2025, Singapore’s total population was 6.1 million, comprising 4.2 million residents and 1.9 million non-residents. The resident population grew by 0.6 per cent from a year earlier and comprised 3.7 million citizens and about 500,000 PRs.

Should the Republic gradually raise its intake of new citizens and PRs, the private housing market’s long-term health will be good.

Many new citizens and PRs are of a working age and highly educated. In a world fraught with instability, if Singapore is welcoming to migrants, the nation can attract relatively wealthy and high-income earning new citizens and PRs.

In short, many new citizens and PRs could be potential private homebuyers including in prime areas. Also, a well-off PR who in time becomes a citizen may become a landed homebuyer.  

Singapore’s strong social cohesion is a vital competitive advantage. Helping new migrants assimilate will be crucial in ensuring social cohesion remains strong.

Can a nation built by migrants manage taking in a higher number of migrants? If the answer is a resounding yes, the private housing market should cope fine with the country’s low resident birth rate.

While many measures are in place to boost the birth rate, expect even more resources to be invested to get locals to have more children.

Still, tackling the vexing issue of the low and falling birth rate is challenging. Nonetheless, the private housing market can likely count on migration to keep it in fine fettle over the long term.