Property Still Be Your Pot of Gold

98
SECTOR BRIEFING
DBS Asian Insights
Will Property Still

DBS Group Research • October 2021
Be Your Pot of Gold?

Why More Isn’t Always Better
for Your Financial Planning
DBS Asian Insights
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02
Will Property Still

Be Your Pot of Gold?
Why More Isn’t Always Better
for Your Financial Planning
Group Research
Derek TAN
[email protected]
Dale LAI
[email protected]
Geraldine WONG
[email protected]
Elizabelle PANG
[email protected]
CBG Financial Planning
Lorna TAN
[email protected]
CBG Business Analytics
LI Jun
[email protected]
Produced by:
Asian Insights Office • DBS Group Research
go.dbs.com/research
@dbsinsights
[email protected]
Geraldine Tan Editor

Gwendolyn Tai Assistant Editor
Martin Tacchi Art Director
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04 Executive Summary
06 Singapore’s enduring love affair with property

Reality check: Things are not looking so rosy
12 Drivers of property prices
Aspiring Upgraders
Demographic shifts
23 Affordability: More room for prices to rise
further?
Income growth out of sync with property
price increases
Are households overstretching themselves?
31 Do property investments still offer the best
returns?
Property and leverage – An unbeatable
combo?
Importance of diversification
44 Growing a diversified nest egg for your
financial future
Holistic financial planning through DBS NAV
Planner
Discovering investment ideas through DBS
Insights Direct
Monetising your home for retirement
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Executive Summary
Property formed close to Singaporeans’ enduring love affair with property dates back to the 1980s, fuelled by
42% of total household the government’s narrative of owning one’s home and implementation of conducive
assets as of 2021 housing policies. Currently, Singapore has one of the highest home ownership rates
in the world1, with approximately 88% of resident households owning a home2. With
Singapore’s strong economic growth through the years, many Singaporeans saw the
value of their homes and property investments appreciate by multiple folds over
time, which made property a major contributor to household net wealth. As of 2021,
property formed close to 42% of total household assets and close to 48% of total
household net worth3. As such, the stability of the property market will continue to play
a vital role in driving household prosperity.
In this report, we analysed the drivers of property prices in Singapore and the role of
property in one’s overall net worth and financial plans. By leveraging publicly available
data (e.g., SingStat) and studying the anonymised database of approximately 1.2m
of the bank’s customers4, we seek to understand key trends in the property market
(e.g., affordability), households’ exposure to property assets and more. Key findings
of the report:
Property alone may not 1. Property, as a wealth accumulation strategy, worked well for earlier generations of
be enough Singaporeans. However, what may have worked for our parents may no longer be
sufficient for us. The outlook of the property market remains uncertain, given the
more modest property price growth in recent decades. While we note a recent
upswing in buyer sentiment, especially from upgraders, we remain watchful of
the pace of increase in the private property price index (PPI) and HDB resale
index – which rose approximately 7% and 11%, respectively, over the past year
despite the COVID-19 pandemic – on the back of the government’s continued
hawkish stance on the property market.
Changing demographics, 2. While owning a property is deeply ingrained in our society, for individuals considering a
changing demand for second property, it is important to consider Singapore’s changing demographics amid
homes an ageing population and tighter manpower policies. These factors may weigh on
the longer-term demand and rental yield for residential properties. Furthermore, key
overhangs for the property market include the prudential measures implemented by
the government, their hawkish stance as property prices climb, and as the government
looks toward mitigating the “lottery effect” of public housing in mature townships.
1 Source: Ministry of National Development, 2021 MND | An Inclusive & Endearing Home
2 Refers to Proportion of Owner-Occupied Resident Households, which is defined by SingStat to be “the proportion
of households where the household reference person or any other member owns the house, and is as reported by
respondents” Source: SingStat Data, 2021 DOS | SingStat Website - Households - Latest Data
3 Data as at 2Q2021. Source: SingStat Data, 2021. (DOS) | SingStat Table Builder – Household Sector Balance Sheet (End
Of Period)
4 Sampling pool: Consumer banking (non-wealth) customers aged between 25-70 years old, excluding work permit
holders, with an income-crediting account.
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Increase in property 3. The resilience in the property market over the past few years has been noteworthy,
prices outpacing salary though some are beginning to question the sustainability of the growth in property
growth? prices and its implications on overall housing affordability. We have seen the pace
of increase in property prices outpace that of gross domestic product (GDP) and
salary growth, raising the risk of froth building up in the property market. We
found evidence of stretched affordability ratios in recent years, with upgraders
buying smaller homes. However, there may be a shift in preference towards
bigger homes, with the prevalence of work-from-home arrangements spurred
by the COVID-19 pandemic, which we believe would further stretch affordability.
This also commensurate with the fact that more households are turning to dual
incomes in order to achieve greater financial flexibility.
Demographics facing 4. Based on DBS’ database on customers with property mortgage accounts with
challenges in housing the bank, we found that affordability tends to be the most stretched (based on
affordability and median mortgage-to-income ratios) among those with income up to S$5,999/
retirement goals month, and in the 30-49 age group. This age group was also found to exhibit the
lowest propensity to invest. In our view, these trends highlight potential concerns
about Singaporeans’ ability to reach their retirement goals.
High acquisition costs 5. Rather than putting all your eggs in one basket (i.e., mainly in property), consider
make property a less growing your net worth through a diversified portfolio. While property may remain
attractive investment a core part of your portfolio (with the power of leverage serving as a double-edged
asset class sword for property investments), we believe the inclusion of other asset classes
such as equities, REITs, and more will form a more balanced strategy in achieving
your financial goals. After studying the total returns of different asset classes since
the first quarter of 2009, we found the S&P500 and Singapore REITs exhibited
the highest growth in invested capital, followed by property assets. Contrary to
popular belief, returns from a second private property were relatively weaker
due to lower loan-to-value (LTV) ratio and higher acquisition costs (e.g., Additional
Buyer’s Stamp Duty or ABSD).
While property will no doubt continue to serve as a key retirement asset for many
households, the adage attesting to property as a golden egg may be increasingly
challenged given Singapore’s changing demographic trends.
Diversification is key; it is now pivotal for individuals to look beyond property to achieve
a holistic financial plan. Holding a variety of assets will help reduce overexposure in
a single asset class, which would protect your portfolio from market downturns in a
Pivotal for individuals single security. The right mix of assets – such as equities, bonds, REITs, alternatives,
to look beyond property CPF/SRS savings, and cash – can help to manage risks and overall portfolio risk-reward
to achieve a holistic ratios for property owners and investors.
financial plan.
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Singapore’s enduring love

affair with property
High property ownership rates among Singaporean

households
Singaporeans’ love affair for property dates back to the 1980s, spurred by the narrative
of owning one’s own home and the housing policies implemented by the Housing &
Development Board (HDB) which has built more than three quarters of the homes
that the Singaporean population is currently living in. Singapore has one of the highest
home ownership rates in the world5, with approximately 88% of resident households
owning a home6. Over the past 30 years, with Singapore’s economic progress and
income growth, property prices have risen by a compounded annual growth rate
(CAGR) of 5.9% for HDB, 4.8% for private property (landed), and 4.1% for private
property (non-landed).
The Singapore property market rose 5.9% between 1991-2011, before slowing to a
CAGR of 1.1% in 2011-2021. More specifically, in 1991- 2001, private property prices
rose 6.8-7.7% and HDB resale by 11.1%, before slowing to a mere 1.0-1.2% and 0.9%,
respectively, between 2011-2021 (Figure 2). For the earlier generation of Singaporeans,
especially the baby boomers (defined as those born between 1946-1964), it is no
surprise that property was a major contributor to household wealth over time.
Singapore has one of the highest rates of

home ownership in the world.
5 Source: Ministry of National Development, 2021 MND | An Inclusive & Endearing Home
6 Refers to Proportion of Owner-Occupied Resident Households, which is defined by SingStat to be “the
proportion of households where the household reference person or any other member owns the
house, and is as reported by respondents” Source: SingStat Data, 2021
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Figure 1. Property price indices (HDB and private properties)
Price Index (1990 to current)

(1Q2009 = 100 i.e. Base)
200
180
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60
40
20
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Quarter & Year
HDB Resale Price Index Private Property Price Index (Non-Landed) Private Property Price Index (Landed)
Note: Private Property Index (Non-Landed) and Private Property Index (Landed) refers to the respective Private
Residential Property Price Indices (PPI) sourced from URA
Source: URA, Data.gov.sg, DBS
Figure 2. Property price indices (HDB and private properties) by decade
Periods Private Std. dev Private Std. dev HDB Resale Std. dev
Property Property Price Index
Index Index
(Landed) (Non-
Landed)
1991 – 2001 7.7% 17.5% 6.8% 12.8% 11.1% 13.6%
2001 – 2011 5.8% 13.5% 4.3% 14.0% 5.8% 5.7%
2011 – 2021 1.0% 3.7% 1.2% 3.0% 0.9% 4.0%
Note: Numbers above show the average returns and standard deviation of Private Property Index (Landed), Private
Property Index (Non-Landed) and HDB Resale Price Index
Household sector net worth had multiplied by 4x over the past two decades.
Household sector net worth in Singapore has grown from S$552bn in 2001 to
S$2,295bn in 2021 (Figure 3). In line with the city-state’s economic growth, household
sector net worth grew at a faster pace between 2001-2011, at a CAGR of 8.5%,
compared with 6.3% in 2011-2021. Although property remains the largest asset class
based on the percentage breakdown of the household sector balance sheet, property
holdings, on an absolute basis, grew at a slower pace than Central Provident Fund
(CPF) and life insurance.
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Figure 3. Household sector net worth & balance sheets
SGD Billion Dollars 2021 2Q 2011 2Q 2001 2Q 1995 2Q
Household Sector Net Worth 2,295 1,243 552 448
Assets 2,622 1,468 695 515
Financial Assets 1,530 740 334 210
Currency & Deposits 523 258 117 83
Shares & Securities 241 161 77 46
Life Insurance 264 110 37 10
Central Provident Fund (CPF) 485 198 90 62
Pension Funds 17 13 13 10
Residential Property Assets 1,093 728 361 305
Public Housing 487 368 193 136
Private Housing 606 360 167 170
Liabilities 327 224 142 67
Mortgage Loans 247 166 105 42
Financial Institutions 208 124 44 23
Housing & Development Board (HDB) 39 42 61 19
Personal Loans 81 58 38 25
Motor Vehicle 11 15 14 9
Credit/Charge Cards 10 7 3 1
Others 60 37 21 15
Note: Household Sector refers to all household institutional units that have engaged in economic activities in Singapore for at least a
year, including: Singapore citizens, Permanent residents, Foreigners, and Unincorporated enterprises (e.g., sole proprietorships).
Source: SingStat, DBS
Property makes up Private housing makes up the largest share of household sector assets.
close to 42% of total Within property assets, the holdings of private housing grew at a faster pace relative to
household sector assets that of public housing since 2013. Currently, private housing makes up more than 23%
of total household sector assets, compared with 19% contributed by public housing
– making private housing the largest component of household sector assets (Figure
3). We note that household sector assets are weighted towards property, which
accounts for 42% of assets, while liquid assets (including currency, deposits, shares &
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securities) account for 29% (Figure 4). Even though property comprises the lion’s share
of household sector assets, its percentage contribution has been declining – from
approximately 52% in 2001 to 50% in 2011, and down to 42% in 2021 (Figure 4). This
implies that Singapore households were likely building their net worth through other
means over the years.
Figure 4. Household sector assets (as of 2Q21)
SGD Billions
Currency 3,000
& Deposits
19.9% 9.2%
Property 10.1%
41.7% 2,000
18.5%
Household Assets Shares &
Securities 19.9%
SGD 2,622 Billions
9.2% 1,000
Life 41.7%
Insurance 49.6%
51.9%
10.1% -
Pension 2001 2011 2021
Funds Central Provident Fund (CPF)
0.6% 18.5% Year
Pension Funds Shares & Securities
L ife Insur ance Central Provident Fund ( CPF)
Currency & Deposits Property
Note: Household sector is defined as all household institutional units that have engaged in economic activities in Singapore for at least
a year, including Singapore citizens, permanent residents, foreigners, and unincorporated enterprises (e.g., sole proprietorships).
Improving financial health of Singapore households
Liabilities-to-asset ratio Liabilities-to-asset ratios have been on a downward trend after reaching its peak of
reached historical lows in 21.3% in 2Q2002 (Figure 5), which reflects the improving financial health of Singapore
1Q2021 households over the years. Even though mortgage loans made up the bulk of household
liabilities (at more than 75% of total liabilities), improving liabilities-to-asset ratios over
the years indicate Singapore households were more likely able to comfortably cover
their financial obligations in recent years, relative to historical trends. Since 1995, the
growth in household liabilities has mainly been attributed to the growth in mortgage
loans, having multiplied by close to 6x from S$42bn in 1995 to S$247bn in 2021,
compared with personal loans which multiplied by more than 3x from S$25bn in 1995
to S$81bn in 2021 (Figure 3).
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Figure 5. Household sector balance sheets and liabilities-to-assets (%)

SGD Billions Household Liabilities-to-assets
3,000 (%) 25.0%
2,500
20.0%
2,000
15.0%
1,500
10.0%
1,000
5.0%
500
- 0.0%
1Q95
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Quarter & Year
Household Assets (LHS) Household Liabilities (LHS) Household Liabilities-to-assets (%) (RHS)
Reality check: Things are not looking so rosy

Will the future be the same? While property was one of the key drivers of wealth
accumulation for the past generations of homeowners, the tailwinds that drove the
strong run in property prices over the past 20 to 30 years may not continue in the
future. Trends influencing future property demand and prices include Singapore’s
changing demographics and lifestyle needs/preferences. Furthermore, household
affordability vis-a-vis income growth prospects, as well as potential changes in
government policies, are also key considerations for the property market.
Financial planning is key
Assess your home purchase in relation to your financial plan and other
investments. This will help to provide more clarity on your overall financial health
and enable you to understand how your other goals may be impacted in the short
and long term.
Home planning tips: Affordability is key when it comes to purchasing a big-ticket

item like property – do your sums carefully to see if you will be able to commit to
the mortgage payments over time before making your purchase. Lenders will assess
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a variety of factors such as your monthly income, debt, credit score and more. For
instance, financial institutions use measures such as total debt servicing ratio (TDSR)
and mortgage servicing ratio (MSR) to ascertain your financial health and ability to
repay financial obligations. Do note that expenses may grow after you upgrade to a
bigger house or purchase additional properties. It is also important to consider these
increased expenses when deciding on the quantum of your housing loan.
The tailwinds that drove strong

property prices over the past 20 to 30
years may not continue…
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Drivers of property prices

Aspiring Upgraders
Robust upgrader demand for private properties
Homeowners upgrading A private property is deemed by many to be an aspirational asset class. Over the years,
for expanding families we have seen many households dipping back into the property market to purchase
or aspirational reasons their second home or an investment property. These households are widely known as
upgraders, wherein demand from these upgraders anchors the annual demand for
private properties. These upgraders are primarily households who have bought their
first public home from HDB and are looking to buy a bigger home due to an expanding
family nucleus and/or for aspirational reasons.
Based on data from Urban Redevelopment Authority (URA), Singapore citizens

contributed to approximately 82% of total private property sales in 2020, while
permanent residents (PRs) and foreigners contributed close to 14% and 4% of
transactions, respectively (Figure 6). While a portion of these buyers could be first-time
buyers, we believe a substantial number of them are upgraders. Further, we believe
these upgraders will continue to support demand for homes in the future.
Figure 6. Breakdown of private property purchases
Proportion of Singaporean private property buyers are rising
% of Singaporean citizens
85% 82%
80%
75%
70%
65%
60%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
Source: URA, DBS
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Figure 6. Breakdown of private property purchases (cont.)
Proportion of PRs and foreigners private property buyers are decreasing
% of PRs and Foreigners
20%
18%
16%
14% 14%
14%
12%
10%
8%
6%
4% 4%
4%
2%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
Permanent Residents (PR) Foreigners
Source: URA, DBS
Major nationalities of buyers purchasing a private home
Others
20%
China
32%
Australia
16%
Indonesia
1% Malaysia
India 21%
10%
Source: URA, DBS
Increase in the number of public housing passing the minimum occupation

period (MOP) will likely drive more households into the private market. In
recent years, and spurred by the COVID-19 pandemic, we are seeing a shift in preference
towards larger homes to accommodate work-from-home needs as companies pivot
towards more flexible working arrangements.
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In our analysis, the number of HDB flats that will complete the MOP is estimated
to increase to 17,000-19,000 per annum over the next 10 years (Figure 7). These
households would be eligible to purchase a new home and are likely to sell their
existing flats to fund the purchase. Assuming 35-40% of these homeowners choose
to upgrade to a new home, we estimate demand from this segment of the market to
average between 6,000-7000 units per annum (p.a.) over the coming decade.
Upgraders’ demand for new homes to

average between 6,000-7000 units p.a.
over the coming decade.
Figure 7. Number of HDB units with 5-year MOP

Number of HDB flats to complete 5-year Minimum Occupation Period (MOP)
Number of Units
30,000
25,000 1 9 ,6 45
1 7 ,0 60 1 7 ,5 00
20,000
15,000
10,000
5,000
-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Year
HDB Units that reach MOP Assumed Upgrader Demand (30%) Average
Source: DOS, MND, DBS
Demand for bigger homes post-pandemic; but are they out of reach for most?
Post COVID-19, buyers’ preferences will likely change, especially as more companies
adopt flexible working arrangements going forward. With work-from-home becoming
more prevalent, we believe many households will prefer bigger homes if it is financially
feasible.
New home sizes to From 2019 onwards, the government put in place new measures requiring developers
increase by at least 20% to increase the size of residential units constructed to at least 85sqm (100sqm in
selected areas) for homes outside the Core Central Region (CCR). This will set a new
trend going forward, in which we estimate the size of new homes to increase by at
least 20%. Given that home prices have risen steadily over the past few years and
during the COVID-19 pandemic, we believe prospective buyers looking to purchase a
bigger home will likely be constrained by the overall quantum.
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Figure 8. Historical average home sizes from 2005 to 2021
Home sizes (Sqft)

In 2017, we argued that home sizes will continue to
1,500 shrink. They have shrunk faster than projected.
1,400
Post policy response in October 2018, average
1,300 new launch will increase to 920sqft vs previous
expectations of 800 sqft.
1,200
1,100
1,000
Forecasts of home sizes
900
800
700
600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Average home sizes (new sales) Home sizes (post new policies)
Source: URA, DBS
Hefty down payments for new homes a key limitation for private property
homebuyers while investors need to cough out even more cash. Based on our
analysis, due to current stamp duties (e.g., additional buyer’s stamp duty or ABSD)
and applicable mortgage limits, prospective Singapore buyers will need to fork out
at least 28% in cash and/or from their CPF for their first property purchase in the
private market. Assuming a 1,000 sqft executive condominium (EC) is worth S$1.2m, a
buyer would have to fork out close to S$330,600 in cash. For a private property worth
S$1.75m, this would increase to approximately S$483,700 (first private property).
Those looking to purchase their second or third property, the upfront cash portion
would increase to 70% to 83% of the home’s value, implying that current property
measures are restrictive for investors.
Prospective buyers are As such, we believe most prospective buyers will likely look to sell their homes in a bid to
most likely to sell their contain upfront costs when purchasing their new homes. For example, if a household
initial homes to finance with a Build-To-Order (BTO) flat sells their home in the resale market for an average
down payment of S$850,000, the household would make a profit of close to S$450,000, assuming an
initial house value of S$400,000. These proceeds will come in handy towards the down
payment for their first private property or EC. Separately, foreigners will have to fork
out a hefty 48% of the home’s value in cash, upfront, for their purchase; these are likely
affluent buyers to be able to do so.
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Figure 9. Scenarios of different cash outlays for various types of property buyers
HDB Executive Private Private Private Private

(BTO) Condominium Property Property 2 Property 3 Property
4-room (Singapore (Singapore (Singapore (Foreign
Citizen) Citizen) Citizen) Citizen)
House Value 400,000 1,200,000 1,750,000 1,750,000 1,750,000 1,750,000
Maximum LTV 360,000 900,000 1,312,500 787,500 612,500 1,312,500
Down Payment 40,000 300,000 437,500 962,500 1,137,500 437,500
Stamp Duties (including ABSD) 6,600 30,600 46,200 256,200 308,700 396,200
Total Cash Outlay 46,600 330,600 483,700 1,218,700 1,446,200 833,700
Monthly Mortgage Payment 1,131 3,327 4,851 2,911 2,264 4,851
Minimum Monthly Salary 4,435 11,089 16,172 9,703 7,546 16,171
Cash outlay / Value of house 12% 28% 28% 70% 83% 48%
Loan-To-Value (LTV) 90% 75% 75% 45% 35% 75%
Assumed Interest Rate 2% 2% 2% 2% 2% 2%
TDSR/MSR 30% 30% 60% 60% 60% 60%
Source: DBS
Overall, we believe upgraders will continue to provide some support to property

demand.
Demographic shifts
Singapore’s declining population growth
Slowing population growth and an ageing population may have longer-term

implications on the demand for homes. Key drivers for housing demand include
population growth and household formation trends. Singapore’s population grew
by an average of 3.5% per annum from 4.3m in 2005 to 5.1m in 2010 (Figure 10),
increasing by close to 1m people in a short span of five years, which drove up demand
for property and subsequently, property prices. Since then, population growth slowed
to an average of 1.1% from 2010-2020, followed by modest growth rate of 0.5% per
annum in the last five years. According to the Population White Paper published in
2013, the government has put in place planning parameters to support a population
size of 6.5-6.9m. Even though the government has stated that these estimates are just
planning parameters as part of infrastructure plans rather than hard targets, these
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projection ranges are important considerations in charting the future growth of the
property market.
Figure 10. Population growth and old-age support ratios (%)
2005 2010 2015 2020
Singapore total population 4,265,762 5,076,732 5,535,002 5,685,800
Resident 3,467,814 3,771,721 3,902,590 4,044,200
Non-resident 797,948 1,305,011 1,632,312 1,641,600
Age: 0 – 19 years 850,155 918,159 755,056 803,400
Age: 20 – 64 years 2,347,167 2,515,175 2,705,981 2,626,400
Age: More than 65 years 270,492 338,387 441,553 614,400
Old-age support ratio 8.1 7.4 6.2 4.3

Note: Old-age support ratios are computed as the ratio of the working age population (e.g., aged 20-64 years) per person
aged 65 years and over in Singapore. Old-age support ratio relates to the number of people who can provide economic
support to the number of older people who may be dependent on others’ support.
Ageing population
Declining working-age With ongoing tweaks in our manpower policies, we note that overall population
population relative to growth has slowed considerably to 0.5% per annum over the past five years. The
elderly population proportion of residents to non-residents has stayed relatively stable at 70% to 30%
(Figure 11). However, Singapore is also experiencing an ageing population, like many
other developed countries. This is illustrated by the downward trend in Singapore’s
old-age support ratios over the decades, which measures the number of residents
aged 20-64 (working-age population) relative to the resident population aged 65
and above (elderly population), declining from 7.4 in 2010 to 4.3 in 2020 (Figure 10).
Singapore’s old-age support ratios are likely to continue its downward trend if growth
in the working-age population is unable to catch up with that of the elderly population.
Factors contributing to this downward trend include rising life expectancy and falling
birth rates.
As a result of Singapore’s ageing population, there will likely be longer-term implications

for the property market, especially as the older generation looks to smaller homes and
their increased needs for amenities such as healthcare.
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Figure 11. Singapore population breakdown
2010
2010 2020
2020
26% 29%
74% 71%
Resident Non-resident Resident Non-resident

Later marriages and low birth rates
While Singaporeans are still getting married, they are settling down later in
life. Contrary to popular belief that more Singaporeans are opting to remain single,
the breakdown of the population by marital status has largely remained consistent
across the past 20 years, with approximately 59-62% of the resident population aged
15 and above being married, and 30-32% being single (Figure 12). While Singaporeans
are generally looking to settle down, more are doing so at a later stage in their lives.
The bulk of marriages happen between ages 29 and 34, where 38% of Singaporeans
transition from singlehood to married life. This is a stark contrast to what Singapore
saw a decade ago, where the bulk of marriages (36%) happened before Singaporeans
hit their 30s, versus a mere 25% in 2020. Singaporeans may be opting to spend more
years focusing on tertiary education or their careers, possibly driven by concerns
related to the rising cost of living and financial burden of raising a family in Singapore.
Figure 12. Singapore marital status and age group breakdown

% of resident population (aged 15 and above) by marital status
% of resident population (aged 15 and
70%
62% 59%
60%
50%
40% 32%
30%
30%
20%
10% Single Married
0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

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Figure 12. Singapore martial status and age group breakdown (cont.)
Percentage of single residents by age group in 2010 and 2020

22020
020
2010 2010
2010
Proportion of single residents (%) Proportion of single residents (%)
100% 97.1%
100% 94.8% 100% 94.8%
90%
90% 90%
80%
80% 75.3% 80%
70%
70% 64.0% 70% 64.0%
60% 60%
50% 50%
37.1%
40% 40%
30.8% 30.8%
30% 30%
20.9%
18.7% 16.6% 14.7% 18.7%
20% 14.7% 13.0% 20% 14.7% 13.0%
10% 10%
0% 0%
20-24
20-24 25-29
25-29 30-34
30-34 35-39 40-44
35-39 40-44 45-49
45-49 20-24 25-29 30-34 35-39 40-44 45-49
Years
Years Years
Years Years
Years Years Years
Years Years Years
Years Years Years Years Years Years Years
Persistent low birth rates will likely have longer-term implications on future
demand for properties. Like many other developed countries such as Hong Kong
and Japan, Singapore has been experiencing a decline in its birth rates over the past
decades. Singapore’s total fertility rate (TFR) declined from 1.83 in 1990 to a historic
low of 1.1 in 2020 (Figure 13). This phenomenon may be attributed to Singaporeans
choosing to settle down later in life.
Pro-fertility policies such as financial incentives and flexible work arrangements have
been rolled out over the years to boost fertility rates. Despite that, Singapore’s TFR
continues to remain way below the replacement rate of 2.1, placing Singapore’s TFR as
one of the lowest in the world7. This is also commensurate with the fact that average
household size in Singapore has shrunk from 3.70 in 2000 to 3.22 in 2020. Households
with two to four persons generally make up the bulk of household sizes in Singapore,
weighing in at a total of 63% (Figure 14).
7 Source: Central Intelligence Agency.gov, Statistica, 2021

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Figure 13. Singapore fertility rates and average household size

Decline in total fertility rates
Total Fertility Rate
6.0
5.0
4.0
3.0
Replacement rate of 2.1
2.0
1.1
1.0
0.0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Year
Average household size in Singapore (including domestic helper)

Average household size in Singapore (including domestic helper) (persons)
3.80
3.70
3.70
3.70
3.60
3.50
3.40
3.30 3.22
3.22
3.20
3.10
3.00
2.90
2.80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
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Small families likely to make up the bulk of Singapore’s households. Smaller

homes and families with up to two children are likely the standard for most households
in Singapore. Couples and/or upgraders may be looking at 4-bedroom units to
accommodate all parties, although in recent times we have seen a rise in demand
for bigger homes due to the rising adoption of flexible working/work-from-home
arrangements. Those with deeper pockets may also opt for 5-room/4-bedroom units
with an additional study room to cater to work-from-home arrangements.
Figure 14. Average household size in Singapore
9%
16%
1-Person
12%
2-Person
3-Person
23% 4-Person
20% 5-Person
6-Person or larger
20%
Long-term effects of declining population growth
One of the highest life Ageing population to weigh on demand in the long term. Data from the
expectancies in the Department of Statistics show that Singapore’s average life expectancy rose from 63 years
world in 1960 to 84 years in 2020, one of the highest in the world. This drastic improvement
in life expectancy, coupled with falling fertility rates, has resulted in a rapidly ageing
population. This trend is unlikely to be broken in the foreseeable future. Singapore’s
median age and old age dependency ratios are expected to increase further, from 42.2
years old and 21.6 in 2020 to 53.4 years old and 58.8 in 2050, respectively (Figure 15).
Population to shrink At current fertility and mortality trends, Singapore’s population is expected to shrink from
from 2030 onwards 2030 onwards. Singapore has taken steps to mitigate this issue through pro-immigration
policies, but there are limitations due to the political and social considerations involved.
Nonetheless, pro-immigration policies would only delay the inevitable.
It is projected that Singapore’s total population will peak around 2045. If Singapore’s
current migration flows remain unchanged, an ageing and shrinking population will
subsequently result in a decline in future housing demand, which would weigh on
property prices going forward.
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Figure 15. Forecast of Singapore population trends

Median age will continue to rise Old-age dependency ratios will keep rising
Years
Ratioold Ratio
Ratio
6070 Years Old 70
52.1 53.4
48.8 50.5 58.8 Ratio of population 58.8
5060 Ratio of population
46.8 60 Ratio of population
44.6 54.1 aged 65+ per 100 54.1
aged 65+ per 100
42.2 48.5 aged 65+ per 100
person 48.5
4050 41.5
50
41.5
40 34.5 40 34.5
30
30 26 30 26
20 21.6 21.6
20 20
1010 10
00 0
2020
2020 2025
2025 2030
2030 2035
2035 2040
2040 2045 2050
2050 2020 2025 2030 2035 2040 2045 2050
Year
Year Year
Population to decline in the future at current growth rates
Million pax
Zero growth
7.0
from here on
Total population
6.0
5.0 Total population

ex immigration
4.0
3.0
2.0
1.0
0.0
1965 1975 1985 1995 2005 2015 2025 2035 2045 2055 2065
Source: United Nations8, DBS
Overall, we believe Singapore’s slowing population growth, ageing population, and

shrinking family sizes will likely weigh on property demand and prices in the longer term.
8 United Nations, Department of Economic and Social Affairs, Population Division (2019). World Population Prospects 2019,
custom data acquired via website.
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Affordability: More room for

prices to rise further?
Reaching new highs but is it getting out of reach? The property market remained
largely resilient throughout the COVID-19 crisis, and we believe its uptrend will continue
as economic conditions improve from 2021 onwards. The resilient performance of
the property market in 2020 has infused positive sentiments among buyers, in view
that prices are likely to continue their uptrend given the improving economic outlook,
employment opportunities, and salary growth in the near term. As a result, property
buyers (including investors) have re-entered the property market over the past year in
anticipation of the continuation of the resilient and steady growth in property prices.
Private PPI rose by As of June 2021, the private Property Price Index (PPI) achieved a new high and rose
7.1%, above pre-COVID approximately 7.1% over the past year to above pre-COVID-19 levels. Similarly, the
levels; HDB Resale index HDB Resale index has also risen, albeit at a higher rate of 10.9%. We note that the
rose 10.9% growth in property prices in the Outside Central Region (OCR) and Rest of Central
Region (RCR) have outpaced that of the Core Central Region (CCR).
The resilience in the property market amid the COVID-19 pandemic has been
noteworthy. However, some are beginning to question the sustainability of the growth
in property prices and its implications on overall housing affordability, especially when
the pace of increase in property prices could potentially outpace that of GDP and
salary growth, which raises the risk of froth building up in the property market.
Figure 16. Property price indices (landed, non-landed and HDB)

200 Price Index (1Q2009 to current)
(1Q2009 = 100 i.e. Base)
180
160
140
120
100
80
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
Quarter & Year

Source: URA, DBS
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Figure 17. Property price indices (by segment)

Price Index (1Q2009 to
200
current) (1Q2009 = 100 i.e.
Base)
180
160
140
120
100
80
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
1Q19
3Q19
1Q20
3Q20
1Q21
Quarter & Year
Core Central Region Rest of Central Region Outside Central Region

Source: URA, DBS
The increase in property prices could

potentially outpace GDP and salary growth,
raising the risk of froth building up in the
property market.
Income growth out of sync with property

price increases
A sustainable property market should be accompanied by income growth.
We believe an upward growth in home prices is only sustainable if it is supported
by increases in household income. This would help to keep home affordability within
sustainable levels, prevent home prices from getting out of reach for the average/
median-income Singapore household, and ensure sustainable property price growth.
Around 24% of Based on SingStat data dating back to 2000, we found that the average median
households today have household income in Singapore more than doubled from S$4,398 in 2000, to S$9,189
a monthly income of in 2020, at an approximate 20-year CAGR of 3.8% per annum. This is likely attributed
S$15,000 and above to the fact that the salary band with the largest proportion of households has shifted
from Below S$3,000 (around 29%) in the past, to S$15,000 and Above (around 24%)
(Figure 18).
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Figure 18. Monthly household income from work, per 100 households
2000 2010 2020 2020
2000 2010
Unclassified 13.3
Unclassified 8.6 Unclassified 10.5
Below $3,000 28.7 Below $3,000 18.7 Below $3,000 12.2

Monthly household income

$3,000 - $5,000 22.8 $3,000 - $5,000 16.2 $3,000 - $5,000 10.6
$5,000 - $8,000 20.1 $5,000 - $8,000 19.8 $5,000 - $8,000 15.2
$8,000 - $12,000 11.3 $8,000 - $12,000 16.1 $8,000 - $12,000 16.6
$12,000 - $15,000 3.5 $12,000 - $15,000 6.5 $12,000 - $15,000 8.8
$15,000 and above 5.0 $15,000 and above 12.3 $15,000 and above 23.5
* Unclassified = households with no working person or fully retired households.

Income growth in the Historically, income growth had generally kept pace with property price
past five years is one of increases, except in the past five years. We found that higher property prices were
the lowest in 20 years generally supported by higher household incomes, although part of this was driven by
a rising proportion of dual-income households (1.77x to 1.89x working persons per
household). That said, we note that in the past five years, income growth has, in fact,
slowed to a mere 1.2% (median income) and 1.7% (80th percentile) (Figure 19) – one of
the lowest growth rates in 20 years – while property prices rose at a faster pace of 2.1%.
Figure 19. Income growth compared with PPI growth over 2000 to 2020
Year Ave Median % 80th % PPI PPI Chg HDB % Chg

working Household Percentile Resale
per (with CPF) CAGR (with CPF) CAGR Index
household S$/m
2000 1.77 4,398 - 7,608 - 94.9 - 75.8 -
2005 1.75 4,831 1.9% 8,641 2.6% 84.5 -2.3% 73.5 -0.6%
2010 1.86 6,342 5.6% 11,105 5.1% 139.2 10.5% 124.4 11.1%
2015 1.96 8,666 6.4% 14,929 6.1% 141.6 0.3% 134.8 1.6%
2020 1.89 9,189 1.2% 16,247 1.7% 163.5* 2.1% 146.4* 0.5%
2000 -2020 3.8% 3.9% 2.5% 3.0%
2000-2010 3.7% 3.9% 3.9% 5.1%
2010 – 2020 3.8% 3.9% 1.2% 1.0%
*2Q21 index numbers are used.

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Price-to-income ratio Price-to-income ratios are inching towards the higher end of 10-year averages.
increased to 12.2x for We compared the price-to-income ratio of the median household income as well as
the median household that of the 80th income percentile against the median transacted quantum of a private
in 2020 property in Singapore, to gauge home affordability. The average transacted quantum
has increased by approximately 3.8% per annum between 2001 and 2Q2021, while
the median household income has increased by approximately 3.4% over the same
period. With the recent strength of the property market, price-to-income ratios have
increased to 12.2x for the median household and 6.9x for a household in the 80th
income percentile in 2020 (Figure 20).
Over the past 20 years, price-to-income ratios for the median household ranged
between 10.1-16.6x, while that of a household in the 80th income percentile ranged
between 5.8-9.4x
Prior to the declines in the PPI on the back of economic crises, price-to-income ratios
ranged around 12.1x (in 2001) to 16.6x (in 2007) for the median household, before
falling to approximately 11.0x from 2010 onwards. Conversely, for the 80th percentile,
price-to-income ratios ranged around 6.9x (in 2001) to 9.4x (in 2007), before falling to
around 6.5x from 2010 onwards.
Figure 20. Price-to-income ratio (median household & 80th percentile)
Price-to-income ratio
18.0 16.6
Price-to-income ratio
16.0 14.8
14.3
18.0 13.3 13.2 13.6
14.0 12.7 12.3 16.6 13.0
12.1 12.5 12.2
16.0 14.8 11.7 11.8 11.6 11.2 11.5 11.7
12.0 14.3
13.6 10.3 10.1
13.3 13.2 9.4 13.0
14.0
10.0 12.7 12.3 12.5
12.1 8.5 11.7 11.8 11.6 12.2
12.0 7.6 7.4
8.0
7.3 7.6 11.2 11.5 11.7
8.0 6.9 7.2 6.9 7.2 6.7 6.7 6.6 10.3 10.1 6.3 6.6 6.5 6.9
9.4 6.0 5.8
10.0
6.0 8.5
7.6 8.0 7.6
7.2 6.9 7.4 7.3 7.2
8.0
4.0 6.9 6.7 6.7 6.6 6.6 6.5 6.9
6.0 5.8 6.3
6.0
2.0
Dotcom/SARS
Dotcom/SARS GFC
GFC COVID-19
COVID-19
4.0
0.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2.0
Dotcom/SARS GFC COVID-19
0.0 Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Recessions/downcycles Median Income 80th percentile

Year Source: URA, DBS
Recessions/downcycles Median Income 80th percentile

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Median home sizes The trade-off between quantum and size. While transaction quantum has
dropped 20% while remained on a steady uptrend, we note that for new homes, there has been an
S$psf rose around 50% average 20% drop in median sizes, even though average price on a per square foot
since 2010 basis (S$psf) has risen by approximately 50% (Figure 21) since 2010.
Affordability will be stretched further once homeowners trade up to a bigger

home. The COVID-19 pandemic has resulted in a shift in preference towards bigger
homes as work-from-home trends normalise. Based on an assumed size of 950
sqft (which is close to the average size of new homes back in 2010), we estimate the
average transaction quantum to increase by 13%, with price-to-income ratios for the
median income household at the higher end of 5-year historical estimates, i.e., levels
we believe are likely to cause some concern among the authorities.
Figure 21. Transaction quantum and price-to-income ratios

Transaction quantum between resale and new homes Assumed price-to-income ratios to hit multi-year highs
has converged if homebuyers buy bigger homes
S$m Price- to-income
Price-to-income ratios
ratios
1.60 16.0 14.7
1.40 14.0
12.2
11.5 11.7
12.0 11.2
1.20 10.3 10.1
1.00 10.0
8.3
0.80 8.0 6.3 6.6 6.5
6.0 5.8 6.9
0.60 6.0
0.40 4.0
0.20 2.0
- -
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2015 2016 2017 2018 2019 2020
Year
Year
Median Income 80th percentile
New Launches Resale
AverageAverage
sizes have
S$ declined 20% since 2010 Average S$psf increased by 50% since 2010
Average S$
2,000 psf
Average
2,000Average S$
psf
Average sizes
1,800 sqft
sizes sqft Average S$ psf
psf
2,000
(resale/ new 1,800
1,800
1,600 1,800
launches) 1,600
1,400 1,600
1,600 1,400
1,200 1,400
1,200
1,000
1,400 1,200
1,000
800 1,000
1,200 800
600 800
600
400
1,000 600
400
200 400
800 200
- 200
-
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 -
600 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
2001 2003 2005 2007 2009 Year
2011 2013 2015 2017 2019 2021 2001 2003 2005 2007 2009 2011Year 2013 2015 2017 2019 2021
Year Year
New Launches Resale
New Launches Resale New Launches Resale
New Launches Resale Source: URA, DBS
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Are households overstretching themselves?

More dual-income Singapore had seen an increase in the number of dual-income households over the
households over the years, contributed by factors such as an increase in cost of living, greater labour force
years participation within the female population, changing societal norms and more.
According to SingStat, the proportion of married couples with dual incomes has
increased to 52.5% in 2020 from 47.1% in 2010 (Figure 22). Dual-income households
have a median combined income of S$11,101, which is higher than that of single-
income households. Single-income households with only the husband employed had
a median income of S$5,070, as compared with single-income households with only
the wife employed with a median income of S$3,213. Furthermore, the number of
married couples with equal qualifications had increased from 44.3% in 2010 to 46.6%
in 2020.
Figure 22. Proportion and median monthly income of married couples

Labour force status of married couples in resident Median monthly income of married couples in
households resident households
(%) Breakdown (2020 vs 2010) Median Income (S$/mth) (2020 vs 2010)
Both Not Employed 15.2% 3,213

14.5% Only Wife Employed
2,194
Only Wife Employed 7.4%

5.8% 5,070
Only Husband Employed
2020 3,701 2020
Only Husband Employed 24.9%
32.6% 2010 2010
11,101
52.5% Dual-income
Dual-income 47.1% 7,602

0.0% 10.0%20.0%30.0%40.0%50.0%60.0% - 4,000 8,000 12,000
% Breakdown (2020 vs 2010) Median Income (S$/mth) (2020 vs 2010)
Benefits of a dual-income household. Dual-income households have greater
financial flexibility and security as couples are able to rely on their spouses to support
their lifestyles. Based on a 2017/18 household expenditure survey, households are
spending on average S$4,900/month on goods and services. When we compare this
against the median resident household combined income of S$11,101 in 2020, this
forms close to 45% of their monthly income (Figure 22).
Mortgage payments typically make up the largest component of a household’s

monthly recurring expense. Based on our analysis on mortgage-to-income ratios
within the private property market9, we found that mortgage-to-income ratios, across
various age groups, range between 0.26 to 0.32 (i.e., 26-32%) (Figure 23). We note
9 Note: Analysis is based on existing property mortgage loans with DBS Bank. Mortgage data are predominantly private
mortgage loans but may have some HDB loans, though at small numbers. Mortgage-to-income ratios is based on the
monthly mortgage payment on an individual customer level
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that homeowners in the 30-39 and 40-49 age groups tend to have higher mortgage-
to-income ratios at an average of 0.27 (27%) (ranging between 19-46%) and 0.26
(26%) (ranging between 19-39%), respectively. These age groups are most probably
experiencing a peak in their financial commitments, with priorities such as starting a
family, upgrading to a new home and more.
Lower-income and Across various income groups, we note that mortgage-to-income ratios are the highest
middle-aged groups at the opposite ends of the income spectrum. We found that homeowners within
more likely to stretch the lower-income groups (earning <S$2,999/month and between S$3,000-S$5,999/
themselves financially month) are more likely to stretch themselves financially, with mortgage-to-income
ratios averaging between 0.30 and 0.38 (30-38%).
What if one loses his/her job? Based on our estimates, a 20% drop in income will
drive mortgage servicing ratios up by 5-9%, which will result in significant financial
stress on households.
Figure 23. Mortgage-to-income ratios, by age and income groups

Mortgage-to-income ratio by age group
50% Average Min to Max
46%
45%
45%
39%
40%
35%
35% 34%
32%
30%
30% 27%
26% 26%
Disclaimer: DBS data shown takes into
consideration the number of Singapore 25% 27% 26%
residents who have salaried accounts
with the bank. Mortgage data mostly 20%
20%
captures private property loans and 19% 19%
is based on the monthly mortgage 15%
payment on an individual customer
level. Mortgage data may have some 10%
HDB loans, though at small numbers. Below 30 30-39 years 40-49 years 50-59 years 60 years and above
On a household level, mortgage-to- Age group
income ratios are likely to be less/half
of the ratios shown.
Mortgage-to-income ratio by income group
Further, to calculate the mortgage-
to-income ratios shown, we took the 50%
50%
50%
50% Average
Average
Average
Average Min
Minto
Min
Min toMax
to
to Max
Max
Max
median monthly mortgage payment 46%
46%
46%
46%
within each group based on DBS data 45%
45%
45%
45%
and divided it by the min/mid point
of each income range. As a form of 40%
40%
40%
40% 38%
38%
38%
38%
illustration, for the age group Below 35%
35%
35%
35%
30, the 45% mortgage-to-income 35%
35%
35%
35% 33%
33%
33%
33%
ratio is derived by taking the median
34%
34%
34%
34% 30%
30%
30%
30%
monthly mortgage payment, divided 30%
30%
30%
30% 28%
28%
28%
28%
27%
27%
27%
27% 27%
27%
27%
27% 27%
27%
27%
27%
by the minimum assumed income of
S$2,999. For the remaining income 25%
25%
25%
25% 27%
27%
27%
27% 24%
24%
24%
24%
groups, we divided the monthly 21%
21%
21%
21%
20%
20%
20%
20%
mortgage payments with the mid point 20%
20%
20%
20% 22%
22%
22%
22% 22%
22%
22%
22%
of each income range: 27% for Below 20%
20%
20%
20%
19%
19%
19%
19%
30 is obtained by taking monthly 15%
15%
15%
15%
mortgage payment divided by S$7,500
(midpoint of S$6,000-8,999 salary 10%
10%
10%
10%
range). Average value of 32% for Below $2999
$2999
$2999
$2999and
and
and
andbelow
below
below
below $3000-$5999
$3000-$5999
$3000-$5999
$3000-$5999 $6000-$8999
$6000-$8999
$6000-$8999
$6000-$8999 $9000-$11999
$9000-$11999
$9000-$11999
$9000-$11999 $12000-$14999
$12000-$14999
$12000-$14999
$12000-$14999$15000
$15000
$15000 and
$15000and
and above
andabove
above
above
30 is then taken by averaging the
mortgage-to-income ratios across the Income
Income group
Incomegroup
Income group
group
different income groups. Source: DBS Business Analytics
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Additional factors to consider
(+) Supply chain disruptions have led to delays in home completions.

Homebuyers are facing delays due to disruptions and higher costs within the
construction industry. The rise in labour cost due to tighter border restrictions, increases
in raw material (cement and steel) costs, coupled with slower construction progress,
have contributed to the upward pressure in prices which is expected to remain sticky
in the medium term. Some respite is offered through the extension of timelines for
developers and the push back in non-essential public infrastructure projects in order to
direct resources toward essential projects. Though, higher construction costs are likely
to stay. Additionally, HDB residential developments are expected to see an additional
year of delay, on top of the typical 4-5 years of completion time needed. This will likely
push prospective households into the HDB resale or private resale market instead.
(-) Government had historically maintained a hawkish view in ensuring

property market stability. The government keeps a close watch on property prices
and has historically introduced prudential measures to ensure stability within the
property market. The government may potentially tweak the supply of new homes
and initiate further measures if the growth in property prices is not supported by
fundamentals. The upcoming public housing supply is estimated to be approximately
16,000 units, which will likely be met by upgrader demand.
(-) Rental market demand remains uncertain, especially with changing foreign
manpower policies, implying a possible slowdown in the volume of expatriates
(expats) seeking rental homes.
(-) Implications from HDB lease decay remains to be seen. The HDB lease decay
may potentially result in long-term implications on the value of HDB flats and on the
household sector’s net worth, especially as approximately 80% of the population
reside in a HDB apartment.
Homeowners in the lower-income and middle-aged

groups are more likely to stretch themselves financially.
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Do property investments still

offer the best returns?
What may work for It is a common belief that property investments offer the best returns. Many
your parents may not Singaporeans grew up watching the value of their parents’ property appreciate by
be enough for you multiple folds. Between 1991-2001, the prices of HDB resale and private residential
properties grew at a CAGR of 11.1% and 6.8-7.7%, respectively (Figure 24), making
property a highly favoured asset class among our parents’ generation.
However, we have witnessed a slowdown in the growth rates of HDB resale and private
residential property prices in recent decades, with prices growing at a mere CAGR of
0.9% for HDB resale and 1.0-1.2% for private properties from 2011 to 2021 (Figure
25). With more modest price growth in recent decades, it is unclear if the investment
strategy that had previously worked for our parents would remain sufficient for us
going forward.
Figure 24. Property price indices (HDB and private properties)

Price index (1990 to current)
(1Q2009 = 100 i.e. Base)
200
180
160
140
120
100
80
60
40
20
0
1Q20
4Q20
3Q18
2Q19
1Q17
4Q17
3Q15
2Q16
2Q13
1Q14
4Q14
4Q11
3Q12
2Q10
1Q11
4Q08
3Q09
2Q07
1Q08
4Q05
3Q06
2Q04
1Q05
4Q02
3Q03
2Q01
1Q02
4Q99
3Q00
2Q98
1Q99
4Q96
3Q97
2Q95
1Q96
4Q93
3Q94
2Q92
1Q93
1Q90
4Q90
3Q91
Quarter & Year

Note: Private Property Index (Non-Landed) and Private Property Index (Landed) refers to the
respective Private Residential Property Price Indices (PPI) sourced from URA
Source: URA, Data.gov.sg, DBS Bank
Figure 25. Property price indices (HDB and private properties), by decades
Periods Private Std. dev Private Std. dev HDB Std. dev
Property Property Resale
Index Index Price
(Landed) (Non-Landed) Index
1991 – 2001 7.7% 17.5% 6.8% 12.8% 11.1% 13.6%
2001 – 2011 5.8% 13.5% 4.3% 14.0% 5.8% 5.7%
2011 - 2021 1.0% 3.7% 1.2% 3.0% 0.9% 4.0%
Note: Numbers above show the average returns and standard deviation, i.e., risk of private properties and HDB resale
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Property market returns The property market used to offer attractive returns, especially for buyers
not as attractive as who bought during major cyclical troughs (e.g., 1990, 1998). However, the
before peak-to-trough performance for the property market had since tapered from the last
market peak witnessed at the end of 1996/1997.
For example, between 1990-1996, the annualised returns for private properties
(measured by the PPI) amounted to 24%, versus 12% between 2009-2013. The same
trend can also be seen with HDB resale prices, where the annualised returns declined
from 34% between 1993-1997 to 11% between 2006-2013, signalling more modest
property returns in recent decades (Figure 26).
Figure 26. Trough to peak returns

Trough Date Trough Peak Peak Price Duration Peak-to- Annualised
Price Date (Index (No. of trough Returns
(Index Value) Quarters) returns
Value) (%)
Private Property
30/12/90 40.3 30/6/96 129.7 22 222% 24%
30/12/98 71.5 30/6/00 100.4 6 40% 25%
30/3/04 80.3 30/6/08 126.9 17 58% 11%
30/6/09 95.3 30/9/13 154.6 17 62% 12%
HDB Resale
30/3/93 30.2 30/3/97 98.6 16 226% 34%
30/12/06 74.9 30/6/13 149.4 26 99% 11%
Note: Peak-to-trough returns is calculated as the total returns at the peak price from the trough price,
(Peak price)
i.e., Peak-to-trough returns = -1,
(Trough price)
which is the total returns generated over the period between the trough date and peak date.
Annualised returns take into consideration the duration.
Slowdown in property The slowdown in property prices can be partly attributed to cooling measures
prices can be partly such as seller’s stamp duty (SSD), loan-to-value (LTV) limits, additional buyer’s stamp
attributed to cooling duty (ABSD) and more, which were introduced since 2010 and are still in place.
measures Property prices largely stabilised after the implementation of cooling measures (Figure
27), with the relatively muted quarter-on-quarter (q-o-q) changes in price indices as
represented by the dotted lines in the grey shaded areas. The cooling measures had
inevitably resulted in more modest property returns in recent decades.
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Figure 27. Property markets have largely stabilised after the

implementation of cooling measures

(1Q2009 = 100 i.e. Base) % Change in Price Index
180 20%
160 15%
140 10%
120
5%
100
0%
80
-5%
60 Start of cooling measures
40 -10%
20 -15%
0 -20%
1Q90
4Q90
3Q91
2Q92
1Q93
4Q93
3Q94
2Q95
1Q96
4Q96
3Q97
2Q98
1Q99
4Q99
3Q00
2Q01
1Q02
4Q02
3Q03
2Q04
1Q05
4Q05
3Q06
2Q07
1Q08
4Q08
3Q09
2Q10
1Q11
4Q11
3Q12
2Q13
1Q14
4Q14
3Q15
2Q16
1Q17
4Q17
3Q18
2Q19
1Q20
4Q20
Quarter & Year
Private Property Price Index (LHS) Change in Private Residential Index (RHS)

(1Q2009 = 100 i.e. Base) % Change in Price Index
160 35%
140 30%
120 25%
20%
100
15%
80
10%
60 Start of cooling measures
5%
40 0%
20 -5%
0 -10%
1Q90
4Q90
3Q91
2Q92
1Q93
4Q93
3Q94
2Q95
1Q96
4Q96
3Q97
2Q98
1Q99
4Q99
3Q00
2Q01
1Q02
4Q02
3Q03
2Q04
1Q05
4Q05
3Q06
2Q07
1Q08
4Q08
3Q09
2Q10
1Q11
4Q11
3Q12
2Q13
1Q14
4Q14
3Q15
2Q16
1Q17
4Q17
3Q18
2Q19
1Q20
4Q20
Quarter & Year
HDB Resale Price Index (LHS) Change in HDB Resale Index (RHS)
For the purposes of the charts above, we have taken the point of the implementation of cooling measures to be on
1Q2010, with the introduction of SSD for residential property and land sold within one year of purchase, as well as the
reduction in LTV from 90% to 80% on all housing loans except HDB loans, which were both implemented in February 2010.
Source: MAS, URA, Data.gov.sg, DBS
Figure 28. Stable q-o-q changes in price indices post cooling measures
Median quarterly price HDB Resale Private Properties
changes
Before cooling measures 1.06% 1.33%
After cooling measures 0.04% 0.47%
Note: Median change in price indices is based on q-o-q price changes; median is used instead of average given the
presence of outliers as seen from the spikes in q-o-q changes for both private and HDB resale price indices.
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Cost of ownership Furthermore, the potential upside from property investments may look even
eating into potential less attractive if one takes into consideration the cost of ownership. Currently,
upside from property the average one-off cost i.e., transaction cost for equities approximate to 0.38%10, a stark
investments contrast to that of properties at >15%. As a result of the cooling measures, the one-off
cost to be incurred by a Singapore citizen buying a second residential property worth
S$1.5m can work up to a whopping S$227,350 today! That’s not all. There are also other
recurring costs such as interest costs, monthly maintenance fees, property insurance
as well as repair and refurbishment costs which are omitted from the calculation in
Figure 29, which could further limit the upside of holding a second property.
As such, given the slowdown in property prices and material one-off costs limiting the
upside of property returns in recent decades, merely holding properties may not be
sufficient for you. In fact, you may find it beneficial to complement your portfolio with
other asset classes such as equities, REITs, etc.
Figure 29. One-off cost for a Singapore citizen buying a second residential
property worth S$1.5m
Amount (S$) (%)
Would you buy a stock
if you knew that it Buyer stamp duty 44,600 2.97%
would decline by more
than 15% in value the Additional buyer stamp duty 180,000 12%
next moment? Legal fees* 2,400 0.16%
Valuation fee* 350 0.02%
Total 227,350 15.16%
*estimates
Source: IRAS, DBS
Property and leverage – An unbeatable

combo?
Fervent property supporters would argue that the attractive long-term
returns of properties would ultimately justify the hefty one-off costs incurred
at the initial stage of investment. Furthermore, together with leverage,
property returns are often said to be unbeatable. To study if the claim is true, this
section seeks to compare the returns of property versus equities, whilst incorporating
the cost of ownership and effects of leverage onto property returns. We will refer to
multiple on invested capital (MOIC) for our analysis.
10 Includes average trading fee (assuming <S$50k per trade), CDP clearing fee and SGX trading fee
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MOIC is calculated by taking the ending investment value, divided by the initial cash
outlay that is invested. For example, for a private property valued at S$1.5m at
1Q2009, assuming a maximum 75% LTV for a private bank loan at S$1.125m, this
would mean a cash injection of S$375,000. Additionally, we will also include BSD and
ABSD (where relevant) to capture the total cash outlay for the property purchase. For
example, for a S$1.5m first private property purchased in 1Q2009, we assume a BSD11
of S$44,600 with no ABSD12, which brings total cash outlay of S$419,600. MOIC is then
calculated based on the final investment value at 1Q2021, divided by the initial cash
outlay of S$419,600. MOIC is used as a metric as it enables us to consider the effects
of leverage in one’s investment through a smaller initial cash outlay that is needed for
the investment. The higher the MOIC, the more attractive the investment is based on
its absolute return basis.
Our analysis will assume the following key assumptions:
• Investment horizon of 1Q2009-1Q2021, with 1Q2009 as the base year
• Maximum LTV for properties, with a fixed interest rate of 1.8% and loan tenure of
20 years
• No leverage for equities and REITs
• One-off transaction costs for properties and equities e.g., BSD, ABSD, transaction
costs
• Rental yield of 3%, with a monthly maintenance fee for properties
• Property tax
Returns of equities Based on our analysis, the returns of equities and REITs still looks relatively
and REITs are more compelling even after assuming maximum leverage for properties. Based
compelling even after on Figure 30, S&P500 and S-REITs showed the highest growth in invested capital,
assuming maximum followed by private property (first property) and then HDB property (first property).
leverage for properties More specifically, for every S$100 invested, one can receive S$635 from S&P500 Index
and S$486 from S- REITs, versus S$399 for a private property and S$339 for an HDB.
Out of the different asset classes, investing in a second private property performed
the worst, with a return of a mere S$209 per S$100 invested which significantly falls
short of equities.
11 BSD rates before 20 February 2018 are as follows: 1% for the first S$180,000 of purchase price/market price
of property, 2% for the next S$180,000 and the remaining amount to be subjected to 3%. BSD rates have been
adjusted starting 20 February 2018, with rates for residential properties as follows: 1% for first S$180,000, 2% for
next S$180,000, 3% for next S$640,000 and lastly, 4% for remaining value. Source: IRAS
12 ABSD rates for a second residential property are at 7% from 12 January 2013 to 5 July 2018, and 12% on/after 8 July
2018. Source: IRAS
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Figure 30. Growth in invested capital of property versus other asset classes Equity & REITs:
• Transaction cost of 0.38%
• No leverage
Growth in Invested Capital
(1Q2009 = 100 or S$100
i.e. Base) 1st Property (HDB):
• Property value of S$500k
700 • BSD of S$9.6k
• Property tax of S$1.5k
S&P500: $635 • Rental yield of 3%
• Maintenance fee of
600 S$300/month
• 75% LTV, 1.8% interest
rate p.a., tenure of 20
years
500 S-REIT: $486
1st Property (Private):
• Property value of S$1.5m
• BSD of S$44.6k
Private (1st):
400 $399 • Property tax of S$4.65k
before 1 January 2015,
HDB (1st): $339 S$4.8k after 1 January
Hong Kong: 2015
$316
300 • Rental yield of 3%
STI: $280 • Maintenance fee of
China: S$300/month
$274 • 75% LTV, 1.8% interest
200 rate p.a., tenure of 20
Private (2nd): years
$209
2nd Property (Private):

100
• Property value of S$1.5m
• BSD of S$44.6k and ABSD
of S$180k
• Property tax of S$4.65k
0
before 1 January 2015,
S$4.8k after 1 January
09
09
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
2015
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
• Rental yield of 3%
Quarter & Year • Maintenance fee of
S$300/month
STI S-REIT S&P500 China
• 45% LTV, 1.8% interest
Hong Kong HDB (1st Property) Private (1st Property) Private (2nd Property) rate p.a., tenure of 20
years
STI S-REIT S&P500 China Hong Kong HDB (1st Private (1st Private
Property) Property) (2nd
Property)
Multiple on Invested 2.80x 4.86x 6.35x 2.74x 3.16x 3.39x 3.99x 2.09x
Capital

Note: Investment returns are based on a time horizon of 1Q2009 to 1Q2021. Excludes repair/refurbishment cost, legal
fees, insurance costs, and SSD. Assumes purchase is by a Singapore citizen. MOIC refers to an investment’s current value
to the amount of cash/money an investor incurs at the starting point.
Source: Bloomberg L.P., DBS Bank
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This is mainly attributed to the significant one-off transaction costs involved,

If you had invested i.e., ABSD costs plus the 45% cap on its LTV, which limits the upside of a second
S$500k into equities property investment. As ABSD increases further with the number of properties
and REITs in early 2009, one owns and as the maximum allowable LTV declines for the third and fourth bank
your net worth could loan, the MOIC of a third and fourth property can be expected to be even lower than
amount up to S$3.2m that of a second property. Our analysis did not take into consideration the practice of
today, versus S$1.0m decoupling of property as a means to avoid the ABSD, which will likely result in a higher
invested in a second MOIC given the lower one-off transaction fees and higher LTV. Regardless, our analysis
private property. shows that apart from properties, there are also other asset classes such as S&P500
and S-REITs that offer compelling returns for investors.
Thinking of a second property? Think twice
Why more isn’t always Our findings show that properties become less compelling as an asset class
the best beyond one’s first home. If you are looking to grow your nest egg for retirement,
investing in an additional property may not be the wisest choice. Across all asset classes,
investing in a second property generates the lowest growth in invested capital (Figure 31).
Figure 31. Growth in net worth (Base = S$500k in invested capital)

Growth in Invested
Growth in Invested Capital
Capital (Base =
(Base = S$500k in invested capital)
S$500k in invested
$3,500,000 capital)
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
S&P500 S-REIT Private (1st HDB (1st Hong Kong STI China Private (2nd
Property) Property) Property)
Note: Investment returns are based on a time horizon of 1Q2009 to 1Q2021.

Furthermore, some may also find the returns from property may not be
sufficient, especially at lower debt levels. Our analysis assumes a 75% LTV for
both private (first property) and HDB (first property); LTVs lower than those rates
would inevitably generate a lower MOIC. For example, private and HDB properties
with an LTV of 45% would generate a mere MOIC of 2.09-2.52x and 2.21x, respectively,
making properties the weakest performing asset out of all the asset classes in relative
terms based on our findings (Figure 32).
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Figure 32. Returns of properties wane with declining LTV

Multiple on Invested Capital (x)
Multiple on Invested
7.00x Capital (x)
6.00x
5.00x
4.00x
3.00x 6.35x
4.86x
2.00x
3.16x 2.80x 2.74x
1.00x 1.74x 1.92x 1.72x
0.00x
S&P500 S-REIT Hong Kong STI China HDB Private (1st) Private (2nd)
75% LTV 65% LTV 55% LTV 45% LTV No leverage
S&P500 S-REIT Hong STI China HDB Private Private

Kong (1st) (2nd)
No 6.35x 4.86x 3.16x 2.80x 2.74x 1.74x 1.92x 1.72x
leverage
75% LTV N/A N/A N/A N/A N/A 3.39x 3.99x N/A
45% LTV N/A N/A N/A N/A N/A 2.21x 2.52x 2.09x

Note: N/A refers to not applicable. For private (second property), the maximum allowable LTV is at 45%. Investment returns
are based on a time horizon of 1Q2009 to 1Q2021.
Caution! Beware of However, we would like to caution homeowners against gearing up in a bid to
leverage bump up their property returns. Additional leverage would undoubtedly expose
homeowners to greater mortgage obligations and financing risks, which would place
them under greater financial stress especially when interest rates increase. Investors
should weigh the trade-offs between further potential upside versus any increased
financial stressors that would come with greater leverage. For investors who are
seeking returns without the financial stressors that come with leverage, our findings
show that other asset classes can also look attractive.
Other considerations
There are also other factors investors need to consider before investing in a physical
property as outlined in Figure 33.
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Figure 33. Factors to consider when investing in physical properties
1. Liquidity Property assets are typically less liquid relative to other asset classes.
2. Property gains may be Property gains may be subjected to SSD when disposed within the
subjected holding period. Other financial assets are typically not subjected to one-
to one-off costs off costs on their capital gains.
3. Time and effort Time and effort are usually needed to manage tenants, and operational
and maintenance matters. Other asset classes such as REITs depend on
professional management and can be a more passive form of real estate
investing.
4. Yields Some financial assets e.g., REITS and dividend-paying stocks also generate
attractive yield levels for investors, which at times can be even more
attractive than the rental yields generated from physical properties.
5. Greater diversification The capital needed to invest in other financial assets is typically smaller,
which enables the investor to pursue greater portfolio diversification.
Furthermore, some financial assets also provide direct exposure into
diversified portfolios e.g., ETF indices provide diversification into a basket
of securities, some REITs invest across a range of industrials, logistics
and office space assets, and more.

Don’t overlook the Out of the considerations identified above, liquidity is especially important to
importance of liquidity investors. In addition, property prices tend to decline more sharply during economic
downturns, especially when residential unemployment rates exceed 4.0%. The
COVID-19 pandemic was the only exception, with the other four market downturns
experiencing sharp declines in property prices (Figure 34). However, it is during these
economic downturns where liquidity matters the most.
Figure 34. Property prices tend to decline more sharply when unemployment rates exceed 4.0%
Unemployment Rate (Resident) versus Private Property Price Index Price Index (1Q2009 = 100 i.e.
Unemployment Rate (%) Base)
7.0% 180
SARs
160
6.0%
GFC 140
5.0% AFC Dot.com
120
Covid-19
4.0% 100
3.0% 80
60
2.0%
40
1.0%
Unemployment rate (LHS) Private Property Price Index (RHS) 20
0.0% 0
1Q06
1Q31
1Q56
1Q81
1Q06
1Q31
1Q56
1Q81
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14
1Q15
1Q16
1Q17
1Q18
1Q19
1Q20
1Q21
Quarter & Year

Note: Unemployment rates (%) are seasonally adjusted
Source: SingStat, CEIC, DBS
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Simply relying on Importance of diversification

property assets may no
longer be sufficient for Overall, you should also look beyond your property and consider other asset
attaining our financial classes such as equities and REITs to build a more diversified nest egg. As our
goals. findings have shown, simply relying on property assets may no longer be sufficient
for attaining our financial goals. It is imperative to seek diversified sources of returns
across other asset classes such as equities, REITs and more, to build a solid nest egg.
However, a significant portion of total household sector assets still lies in

property, based on the latest available SingStat data (Figure 35). On an aggregate
basis, property assets make up close to 42% of the total household sector assets,
while shares & securities only make up approximately 9%. Whilst it is of no surprise
that property assets make up the largest proportion of household sector assets,
financial assets in shares and securities are at significantly low levels, even relative to
currency & deposits and life insurance at an estimated 20% and 10%, respectively. The
latest trends in household sector assets illustrate that there is still plenty of room for
diversification in one’s investments to build a more diversified nest egg.
Figure 35. Household sector assets breakdown (2Q2021)

Currency
& Deposits
19.9%
Property
41.7%
Household
Shares &
Assets Securities
SGD 2,622 9.2%
Billions Life
Insurance
10.1%
Pension
Funds Central Provident Fund (CPF)
0.6% 18.5%
SGD Billions
3,000
9.2%
10.1%
2,000
18.5%
19.9%
1,000
41.7%
49.6%
51.9%
-
2001 2011 2021
Note: Household sector is defined as all household

Year
institutional units that have engaged in economic activities Pension Funds S har es & Se curi ties
in Singapore for at least a year, including Singapore citizens,
permanent residents, foreigners, and unincorporated Li fe Insurance Central Provi de nt Fund (CPF)
enterprises (e.g., sole proprietorships).
Curre ncy & De posits Prope rty
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Figure 36. Household sector balance sheet
SGD Billion Dollars 2021 2Q 2011 2Q 2001 2Q 1995 2Q
Household Sector Net Worth 2,295 1,243 552 448
Assets 2,622 1,468 695 515
Financial Assets 1,530 740 334 210
Currency & Deposits 523 258 117 83
Shares & Securities 241 161 77 46
Life Insurance 264 110 37 10
Central Provident Fund (CPF) 485 198 90 62
Pension Funds 17 13 13 10
Residential Property Assets 1,093 728 361 305
Public Housing 487 368 193 136
Private Housing 606 360 167 170
Liabilities 327 224 142 67
Mortgage Loans 247 166 105 42
Financial Institutions 208 124 44 23
Housing & Development Board (HDB) 39 42 61 19
Personal Loans 81 58 38 25
Motor Vehicle 11 15 14 9
Credit/Charge Cards 10 7 3 1
Others 60 37 21 15
Many middle-aged However, we find that individuals have a relatively low propensity to invest,
individuals are not especially among the middle-aged, across all income groups (Figure 37)13.
investing Based on the percentage share of DBS retail customers with investment holdings, it
is evident that the 35-44 and 45-54 age groups experience the lowest propensity to
invest across all income groups, relative to other age groups (with the exception of age
65 & above).
13 Kindly refer to DBS Asian Insights report “Same storm, different boat: Impact of COVID-19 on financial wellness of
Singapore” dated 18 Aug 2020.
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Furthermore, we saw in Figure 23 (see “Mortgage-to-income ratios, by age and income

groups”) that it is also the middle-aged group that showcased the highest exposure to
mortgage liabilities. Through this, we can infer that instead of channelling their savings
into retirement and investments, many individuals in the middle-age group are setting
aside savings to meet their mortgage liabilities instead.
Given that retirement is near for many, especially for those in the 45-54 age group, the
relatively low levels of investments and relatively high levels of mortgage liabilities may
hinder them from reaching their retirement goals.
Figure 37. % share of retail and DBS NAV Planner customers with investments, by age group and income
% share of retail customers with investments % share of DBS NAV Planner customers with
investments
20% 20%
18% 18%
16% 16%
14% 14%
12% 12%
10% 10%
8% 8%
6% 6%
4% 4%
2% 2%
0% 0%
25- 34 35 - 44 45 - 54 55 - 64 65 and above 25- 34 35 - 44 45 - 54 55 - 64 65 and above
$2999 & below $3000 to $4999 $5000 to $6999 $2999 & below $3000 to $4999 $5000 to $6999
$7000 to $9999 $10000 and above $7000 to $9999 $10000 and above
Source: DBS Bank
Active investors are We find that customers are more likely to invest when they use DBS NAV
better positioned to Planner. As we can see from Figure 37, with the help of DBS NAV Planner, a digital
grow their net worth financial and retirement advisory tool on DBS’ platform, customers across most age
and income groups are more likely to invest. Customers who invest more actively will
be better positioned to grow their net worth.
For individuals new to financial planning and investing, consider tools such
as DBS NAV Planner. DBS NAV Planner can be accessed via DBS digibank Mobile
Application and is an intuitive digital tool which brings together everything from
income, cash, CPF savings, property and investments, expenses, and loans and more
under one platform, which helps to provide users with a holistic view of one’s net
worth.
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You can also consider tapping on DBS Insights Direct, a new research platform
to sift out undervalued stocks and emerging trends when building your
investment portfolio. If you are unsure where to start, look at the equity picks across
markets in Singapore, Hong Kong/China, Thailand, and Indonesia to kickstart your
journey to build a more diversified nest egg, above and beyond property assets.
Try Insights Direct

on Mobile Now!
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Growing a diversified nest

egg for your financial future
With longer life expectancies and rising healthcare costs, Singaporeans are beginning
to realise their nest eggs may no longer be sufficient to last them through their
retirement years.
A Financial Planning Attitudes Survey conducted by MoneySense in 2017 showed

evidence of misconceptions among Singaporeans with regard to the opportune time
to start their financial planning, as well as uncertainties about how best to go about
it. For instance, 1 in 5 feel they only need to start financial planning when they are
looking to retire. Additionally, only 1 in 5 people believe they are knowledgeable about
investing. A 2020 parliamentary reply concluded more must be done to raise the level
of financial literacy among Singaporeans.
For many Singaporeans, property forms a significant part of their retirement nest egg.
In fact, property ownership is top of mind for many Singaporeans, especially when it
comes to building wealth and in the search for a steady stream of passive income.
For individuals with portfolios heavily reliant on properties, they typically rely on rental
income and property appreciation for returns. However, what may have worked for
our parents may no longer be sufficient for us going forward given the government’s
cooling measures.
Diversification is key to It is important to view your property as a part of your overall financial plan. Diversification
portfolio management is key to portfolio management. Holding a variety of assets can help to manage the
downside risk that a single security or asset class can have on one’s overall returns. The
right mix of assets – for example, equities, bonds, REITs, alternatives, CPF/SRS savings,
and cash – can help to maximize one’s portfolio risk-reward. Speak to a wealth planning
manager to get the right asset allocation that is best suited to your risk profile and needs.
To build a diversified and sustainable nest egg, consider your property in relation to
other asset classes. Besides affordability, other factors to consider include home loan
repayment quantum and tenure, inflation, liquidity, and the potential income pay-outs
from other investments.
Start investing now With technology, investing in asset classes beyond one’s property has increasingly
to reap the power of become more convenient and cost effective, so you can get started earlier with less.
compounding Make time your ally and prioritise planning for longer-term goals. Doing so will enable
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you to reap the power of compounding. There is a wide range of low-cost options at
your fingertips – in approach (such as via regular savings plans and robo-advisers) and
in products (such as equities, exchange-traded funds) – to help you achieve financial
wellness without depending solely on property.
The COVID-19 pandemic served as a wake-up call for us to take a hard look at our
finances. DBS has made concerted efforts to motivate and empower the public with
various financial education programmes, such as DBS NAV University and partnerships
with the CPF Board, SGX (FLY programme), the Singapore University of Social Sciences,
schools, People’s Association, and more.
The bank’s multi-pronged approach includes DBS NAV Planner (a digital financial
advisory and retirement tool), a wide range of insurance and investment products,
a nation-wide financial education game BINGO for our customers, as well as an in-
Holding a variety of house annual Financial Planning Challenge to raise the bar for DBS’ dedicated team
assets can help to of wealth planning managers. Underlining our approach is the DBS Financial Planning
manage the downside Framework, which places top priority on holistic financial planning.
risk that a single
security or asset class Since its launch in April 2020, more than 2.4m customers have been engaged with
can have on one’s the DBS NAV Planner. We have found that NAV Planner users generally invest greater
overall returns. sums of capital in a year – at about S$7,500 – which is more than double the amount
invested by an average retail customer at S$3,000.
Holistic financial planning through DBS

NAV Planner
The path to wealth accumulation involves building positive cashflows, which can then
be channelled into suitable investments aligned to one’s objectives, risk profiles and
investment horizons. Remember: Holistic financial planning is more than just an
investing idea or strategy.
Advanced digital advisory tools, such as the DBS NAV Planner, offer building blocks
that empower customers to build comprehensive financial plans to navigate one’s life
journey with confidence. It encompasses a customised budget with saving/spending
targets, aids to identify and close one’s insurance and investing gaps, plans for one’s
home, integration of multiple money streams and more.
With DBS NAV Planner, one would be able to gain access to holistic financial planning
at his/her fingertips, complemented with personalised tips and insights. Say goodbye
to excel spreadsheets and to worries that may come from potentially missing out on
information from various sources like CPF, HDB, IRAS and multiple bank accounts. Relevant
information related to one’s finances can now be consolidated into one application with
DBS NAV Planner, which provides greater convenience and clarity to users.
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Use DBS NAV Planner for your wealth planning needs
Emergency Savings
Protection
Investments
Money in & Money out

Tracks spending categories for
a better understanding of your
money inflows and outflows
Map Your Money

(Retirement & Goals)
Integrates CPF, SRS Rules,
Cashflow Projections of
different money streams with
goal simulation, connecting
Ideas for you (personalised)
Suggestions on how to
improve your finacial wellbeing
Assets & Liabilities

A summary snapshot of your
assets at a specific period
Here are 12 key financial planning considerations.
1. Do you have a realistic budget that keeps track of your saving and spend targets?
2. Do you have enough emergency savings?
3. What are your insurance needs?
4. Are there any existing insurance gaps and how do you close these gaps?
5. Is your money working hard enough for you?

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6. What are the suitable investments that are aligned to your objectives, risk profile
and investment horizon?
7. How do you fund your children’s tertiary education?
8. How do you get the most out of your home?
9. With a longer lifespan and higher inflation rates, do you have sufficient income
streams to tide you through your retirement?
10. What tax savings can you enjoy?
11. How do you ensure the financial security of your loved ones in the event of
unforeseen circumstances?
12. How do you ensure a smooth distribution of your assets in the event of unforeseen
circumstances?
Discovering investment ideas through

DBS Insights Direct
Make more informed investing decisions by using Insights Direct, an easy-to-use
research platform where one can access award-winning and in-depth analysis of more
than 500 stocks across Singapore, Hong Kong, China, Indonesia, and Thailand.
After all, securing your financial future is not just about working hard, it is also about
working smart. With Insights Direct, investing is now easier with these interactive
features:
• Investment Themes - With a new top idea or more a day, discover our best
trading ideas from undervalued stocks, sectoral trends to thematic ideas – all
consolidated in one spot for your easy viewing.
• Equity Picks - Not sure where to begin? Check out our regional equity picks.
Closely watched by our regional strategists, our selection of stocks gets updated
as and when news breaks or technical charts show a change.
• Stock Screener - Interested to gain exposure to a sector but unsure which stocks
look good? Use this tool to sieve out buy calls, compare dividend yields and stocks’
potential total returns.
• Watchlist - Identified a stock you’re interested in or holding? Set up a watchlist for

a quick reference of your stock holding.
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Access top ideas on Insights Direct
Stock screener feature

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Watchlist feature
Monetising your home for retirement

Other than providing a roof over your head, one’s strategy with his/her residential
property can influence one’s nest egg and quality of life during those golden years.
Here are 5 things to consider when retiring with a property on hand.
1. Be free from home loan liabilities
Besides being a big-ticket item, mortgage is a long-term financial commitment that

typically lasts between 20 and 35 years. As such, there’s a need to manage your
property as part of your retirement planning. One strategy is to pay off your mortgage
before reaching the retirement age. You can redeem your mortgage when you have a
significant sum of idle cash e.g., annual bonuses, windfall.
2. Renting out your property for income
You can consider renting out a room, or the entire unit to enjoy rental income (if
you have an alternative place to stay) for your retirement. Do bear in mind the time/
effort/capital needed to manage tenants, operations, and maintenance, as well as the
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possibility of fluctuating rental income streams over the years. Additionally, if you are
living with strangers, there is also the likely trade off in privacy and convenience.
3. Downsizing
You can consider downsizing your current home by selling it and buying a smaller
property which reduces the upkeeping costs. This is especially applicable if your
children are no longer living under the same roof as you. The surplus from the sales
proceeds can go a long way to fund your retirement lifestyle. To stretch your nest egg,
you can make it work harder by investing in suitable investments.
4. Government schemes – Lease Buyback and Silver Housing Bonus
There are government schemes that can help you unlock the value of your HDB flat to
supplement your retirement income. For instance, under the Lease Buyback Scheme
(LBS), you can sell part of your flat’s lease to HDB and choose to retain the length of
lease based on the age of the youngest owner. Part of the sales proceeds will be used
to top up your CPF Retirement Account to the CPF Full Retirement Sum ($186,000 in
2021). Doing so will enable you to receive higher monthly pay outs from the national
annuity scheme CPF LIFE, for as long as you live.
Under the Silver Housing Bonus (SHB), when you sell your property (either HDB
or private), you will receive a bonus if you choose to buy a 3-room or smaller flat.
Conditions apply for both schemes.
5. DBS Home Equity Income Loan
If you own a private home and are between the age of 65 to 79, you can consider the
DBS Home Equity Income Loan as an avenue to unlock some cash while remaining in
your home.
If you are a Singapore citizen or PR, the DBS Home Equity Income Loan allows you
to borrow against your fully paid private residential property to top up your CPF
Retirement Sums which will be used for the CPF LIFE scheme. This will result in higher
monthly pay-outs for life to supplement your retirement funds.
Here are some key features:
• No monthly loan repayments, with the loan amount and accrued interest payable
only at loan maturity
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• Fixed interest rate of 2.88% p.a. throughout the loan tenure
• Loan tenure of up to 30 years – till you (or the youngest borrower in the case of a
joint loan) reaches age 95
• Flexibility to sell the property anytime, and repay the loan with no penalty
• The minimum loan amount would be the amount needed for you to top-up your
CPF savings to meet the Full Retirement Sum for your cohort
• The maximum amount that can be borrowed is the amount required to top-up to
the prevailing CPF Enhanced Retirement Sum (S$279,000 in 2021)
Simply relying on property assets may no longer be sufficient in

attaining our financial goals. It is imperative to seek diversified sources
of returns across other asset classes such as equities, REITs and more,
in building a solid nest egg.
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Disclaimers and Important Notices
The information herein is published by DBS Bank

Ltd (the “Company”). It is based on information
obtained from sources believed to be reliable, but
the Company does not make any representation
or warranty, express or implied, as to its accuracy,
completeness, timeliness or correctness for any
particular purpose. Opinions expressed are subject
to change without notice. Any recommendation
contained herein does not have regard to the
specific investment objectives, financial situation
and the particular needs of any specific addressee.
The information herein is published for the

information of addressees only and is not to be
taken in substitution for the exercise of judgement
by addressees, who should obtain separate legal or
financial advice. The Company, or any of its related
companies or any individuals connected with the
group accepts no liability for any direct, special,
indirect, consequential, incidental damages or any
other loss or damages of any kind arising from
any use of the information herein (including any
error, omission or misstatement herein, negligent
or otherwise) or further communication thereof,
even if the Company or any other person has been
advised of the possibility thereof.
The information herein is not to be construed as

an offer or a solicitation of an offer to buy or sell
any securities, futures, options or other financial
instruments or to provide any investment advice
or services. The Company and its associates, their
directors, officers and/or employees may have
positions or other interests in, and may effect
transactions in securities mentioned herein and
may also perform or seek to perform broking,
investment banking and other banking or financial
services for these companies.
The information herein is not intended for

distribution to, or use by, any person or entity in any
jurisdiction or country where such distribution or
use would be contrary to law or regulation.
Live more, Bank less
www.dbs.com

Property Still Be Your Pot of Gold

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Property Still Be Your Pot of Gold

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98

DBS Asian Insights

Will Property Still

Be Your Pot of Gold?

Will Property Still

CBG Financial Planning

CBG Business Analytics

Geraldine Tan Editor

06 Singapore’s enduring love affair with property

Singapore’s enduring love

High property ownership rates among Singaporean

Singapore has one of the highest rates of

Figure 1. Property price indices (HDB and private properties)

Price Index (1990 to current)

Figure 2. Property price indices (HDB and private properties) by decade

2001 – 2011 5.8% 13.5% 4.3% 14.0% 5.8% 5.7%

2011 – 2021 1.0% 3.7% 1.2% 3.0% 0.9% 4.0%

Figure 3. Household sector net worth & balance sheets

SGD Billion Dollars 2021 2Q 2011 2Q 2001 2Q 1995 2Q

Household Sector Net Worth 2,295 1,243 552 448

Assets 2,622 1,468 695 515

Financial Assets 1,530 740 334 210

Currency & Deposits 523 258 117 83

Shares & Securities 241 161 77 46

Life Insurance 264 110 37 10

Central Provident Fund (CPF) 485 198 90 62

Residential Property Assets 1,093 728 361 305

Public Housing 487 368 193 136

Private Housing 606 360 167 170

Liabilities 327 224 142 67

Mortgage Loans 247 166 105 42

Financial Institutions 208 124 44 23

Housing & Development Board (HDB) 39 42 61 19

Figure 4. Household sector assets (as of 2Q21)

Improving financial health of Singapore households

Figure 5. Household sector balance sheets and liabilities-to-assets (%)

Source: SingStat, DBS

Reality check: Things are not looking so rosy

Financial planning is key

Home planning tips: Affordability is key when it comes to purchasing a big-ticket

The tailwinds that drove strong

Drivers of property prices

Based on data from Urban Redevelopment Authority (URA), Singapore citizens

Figure 6. Breakdown of private property purchases

Proportion of Singaporean private property buyers are rising

Figure 6. Breakdown of private property purchases (cont.)

Proportion of PRs and foreigners private property buyers are decreasing

% of PRs and Foreigners

Major nationalities of buyers purchasing a private home

Increase in the number of public housing passing the minimum occupation

Upgraders’ demand for new homes to

Figure 7. Number of HDB units with 5-year MOP

Figure 8. Historical average home sizes from 2005 to 2021

Home sizes (Sqft)

Source: URA, DBS

HDB Executive Private Private Private Private

Maximum LTV 360,000 900,000 1,312,500 787,500 612,500 1,312,500

Down Payment 40,000 300,000 437,500 962,500 1,137,500 437,500

Total Cash Outlay 46,600 330,600 483,700 1,218,700 1,446,200 833,700

Monthly Mortgage Payment 1,131 3,327 4,851 2,911 2,264 4,851

Minimum Monthly Salary 4,435 11,089 16,172 9,703 7,546 16,171

Loan-To-Value (LTV) 90% 75% 75% 45% 35% 75%