Fleeing the Nest: Why More Young Singaporeans Are Choosing to Rent

For decades, the narrative in Singapore has been clear: young adults live with their families until their Build-to-Order (BTO) flat – a more affordable, subsidised public housing option – is ready. However, a new trend appears to be emerging. More young couples and even singles are opting to rent their own place, breaking away from the multi-generational household model that has long been the norm. This shift in societal behaviour presents a fascinating glimpse into the evolving aspirations and priorities of young Singaporeans.

Why the Change?

Several factors are driving this move towards renting. A key reason is the desire for independence. Many young adults, after entering the workforce, crave the freedom to make their own decisions about everything from decorating their space to setting their own house rules. Living with parents often comes with established routines and expectations, and a yearning for autonomy motivates some to seek out their own space.

Financial considerations also play a major role, especially when it comes to the decision by couples to rent abroad, such as in nearby Johor Bahru (JB). While renting within Singapore allows them to build a life together in a familiar place, the high cost of rentals in the island city can significantly delay their long-term financial goals, such as saving for a down payment on a BTO flat. Renting abroad offers a temporary solution. They can enjoy a more affordable living situation while waiting for their BTO to be completed. This prioritises living in the present without sacrificing their future plans for homeownership.

In fact, our recent SensingSG data shows that 14% of young Singaporeans (aged under 35) own a property in JB while 12% are renting one there. When further asked if they would consider JB as a residential option if travel became more convenient between Singapore and JB, four in 10 said that they would buy a home and an even higher percentage (42%) said they would rent. These data points prove there is real hunger and serious consideration among younger Singaporeans beyond the local housing market and existing societal expectations/norms.

Renting also allows couples to start their lives together sooner and build a sense of shared responsibility for managing a household, akin to a practice-run before moving to their permanent homes! Additionally, the introduction of co-living spaces provides a more affordable option for young singles or couples who don't necessarily need a large space.

Shifting societal values also contribute. The emphasis on filial piety, while still strong, may be loosening its grip slightly. Young adults are increasingly exposed to global trends of independent living, and this may influence their own desires. Furthermore, the increased participation of women in the workforce may lead to a greater sense of financial independence and a stronger urge for autonomy within the household.

Is This a Long-Term Trend?

While the exact trajectory is uncertain, several factors suggest this trend towards renting is likely to continue. Firstly, property prices in Singapore are expected to remain high due to land scarcity and government policies aimed at curbing speculation. This will make BTO flats even less attainable in the short term, pushing young adults towards the rental market.

Secondly, the concept of co-living as discussed earlier is gaining traction. These shared living spaces offer a sense of community and affordability, making them particularly attractive to young professionals. As co-living options become more established and diverse, they are likely to draw a larger segment of the young adult population.

Finally, changing societal norms may continue to fuel the trend. As Singapore becomes more cosmopolitan and globalised, the traditional multi-generational household model may become less prevalent. Younger generations may prioritise personal growth and independence over the immediate needs of extended family.

Implications for Singapore

This shift towards renting has significant implications for Singapore's social and economic landscape. It may lead to a growth in the rental market, assuming that there may be a substantial chunk of the young population choosing to rent within Singapore instead of going abroad. In such a scenario, demand for rental units is likely to rise, potentially putting pressure on rental prices. The government may need to implement policies to ensure a stable and affordable rental market for young adults. The Singapore Budget 2024 specifically addressed the challenges faced by young couples waiting for their flats, such as the Parenthood Provisional Housing Scheme (PPHS) Voucher, which provides a one-year rental voucher (S$300 per month) to eligible families awaiting their BTO flats. This allows them to offset the cost of renting an HDB flat in the open market while waiting for their new home to be completed.

Initiatives such as these will be welcomed by young Singaporean homeowners. Both SensingSG and our rapid-response Budget 2024 report showed that housing accessibility is a top-of-mind concern for them.

However, young adults choosing to move out of home earlier could present challenges. A further rise in independent living could lead to changes in household formation patterns ­- with young adults moving out earlier, the average household size in Singapore may decrease. This could potentially have long-term implications for social security policies and population growth. Increased independence will also inevitably lead to a greater focus on individual financial planning. Young adults who rent will need to develop budgeting and savings skills to manage their monthly expenses. This could foster a more financially responsible generation, but it may also highlight the need for financial literacy education targeted at young adults.

Conclusion

The decision to rent marks a significant shift in the traditional living arrangements for young Singaporeans. Driven by a desire for independence, financial realities, and evolving societal values, this is likely to continue. While this presents challenges in terms of housing affordability and social policy, it also signifies a maturing society where young adults are taking charge of their own lives and shaping their own version of the Singaporean dream.

Housing affordability and cost are living are among the several issues we cover in our SensingSG series where we measure real-time community sentiment in Singapore. If you haven’t had the chance to explore it yet, do check out our interactive website for a deep dive into what matters to Singapore.

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