You are standing at the base of a property ladder that seems far out of reach. As a member of Generation Z or millennial, you are facing difficult challenges in achieving homeownership in Southeast Asia. Dubbed ‘Generation Rent,’ you and your friends are struggling to move out of your parents’ homes due to cultural and economic factors such as filial piety and high home-price-to-income ratios. Some say Baby Boomers had it a lot easier to become a homeowner and get on the property ladder.
Despite your desire for independence, it seems like the odds are stacked against you. However, some countries in the region, such as Singapore, have taken steps to provide affordable housing options and financing support for younger generations.
In this article, we will explore where Gen Z and millennials stand on the property ladder in Southeast Asia and what policy measures and financial tools can help them climb higher towards their goal of homeownership.
The Concept of "Generation Rent" in Southeast Asia
Starting with cultural factors and strong family ties, it’s important to note that Southeast Asia’s youth haven’t felt as much pressure to move away from their families compared to other parts of the world.
Filial piety still holds sway in the region despite its progressive image. In fact, taking care of parents is cited as the top barrier to moving out among millennials in Thailand and Indonesia.
Delayed marriage also plays a role in homeownership aspirations, with higher-than-average ages for first marriages across Southeast Asia.
Being unmarried prevents most respondents in Singapore from flying the coop, echoing conservative social norms. This trend has contributed to a lower rate of homeownership among younger generations and has resulted in a lack of urgency when it comes to purchasing property.
Overall, these cultural factors and delayed milestones contribute to the concept of ‘Generation Rent’ in Southeast Asia, where young people are more likely to stay at home with their families than venture out on their own.
However, there are efforts being made by governments and real estate developers alike to address this issue through programs like public housing and financing options for first-time buyers.
Cultural factors and strong family ties
With strong family ties and a cultural emphasis on filial piety, Southeast Asian millennials may not be in a rush to leave the nest, but this could change for Generation Z as they seek more independence and make ethically informed buying decisions.
Traditional values still hold considerable influence for many young people in the region, with taking care of parents cited as the top barrier to moving out by 49 percent of Thai millennials and 31 percent of Indonesian respondents in a recent PropertyGuru survey. Similarly, being unmarried was found to prevent most Singaporean respondents from leaving home (41 percent), reflecting conservative social norms.
Despite these cultural ties, younger generations are increasingly seeking their own paths. This cohort tends to factor in ethical considerations such as air quality and proximity to green spaces when choosing where they live, suggesting that sustainable developments may be particularly attractive.
Additionally, McKinsey has noted that Gen Z prioritizes access over consumption, which could translate into demand for new housing concepts that offer flexibility and freedom rather than static ownership models.
Filial piety and its influence on housing decisions
Filial piety continues to hold considerable sway in Southeast Asia, where many young people prioritize taking care of their parents over moving out and pursuing homeownership. This evokes a sense of familial duty and responsibility.
Family influence is strong in the region, where tight-knit family cultures and higher-than-average ages for first marriage mean that millennials have not felt as much pressure to move away from their families compared to other parts of the world.
In fact, a recent survey by PropertyGuru shows that taking care of parents is the top barrier to moving out for 49 percent of millennials in Thailand and 31 percent in Indonesia. Meanwhile, being unmarried prevents most respondents (41 percent) from flying the coop in Singapore.
Marriage trends also play a role in this phenomenon. With lower rates of marriages among millennials across Southeast Asia, there is less pressure on them to start families or build homes. However, this cultural norm combined with housing affordability issues means that many young people are delaying their homeownership aspirations until later in life.
While public housing covers 80 percent of Singapore’s population and financing is readily available, other countries have struggled with high home-price-to-income ratios due to stagnating wage levels in developing economies.
As such, it remains to be seen how filial piety will continue influencing housing decisions for generations to come amidst economic challenges.
Delayed marriage and its impact on homeownership aspirations
The postponement of marriage among young people in Southeast Asia is affecting their ability to achieve homeownership aspirations. Societal norms play a significant role in this phenomenon, as many cultures in the region place great emphasis on getting married before settling down and starting a family.
However, financial constraints are also a major factor, as rising costs of living and stagnant wages make it difficult for young people to save enough money for a down payment on a home. With the average age of first-time marriages increasing across Southeast Asia, many millennials and Gen Zers are delaying their plans to buy a home until later in life.
This delay can impact their long-term financial goals and leave them feeling frustrated with their inability to achieve the same level of economic stability enjoyed by previous generations. As such, addressing affordability issues in Southeast Asia’s housing market will be crucial if younger generations hope to attain homeownership and build wealth over time.
Affordability Issues in Southeast Asia's Housing Market
High home-price-to-income ratios and stagnant wage levels in developing economies have made homeownership elusive for many in Southeast Asia, particularly millennials and Generation Z.
The region suffers from unsustainable capital value growth in some cities, fueled by speculative buying and low-interest-rate environments, especially during the pandemic.
Portents of a housing unaffordability crisis could make Generation Z the true heir apparent of the ‘Generation Rent’ tag, as social trends are reversing, with more youths desiring independence from their families.
High home-price-to-income ratios and stagnant wage levels in developing economies
As a potential homebuyer in Southeast Asia, you may face challenges due to the region’s high home-price-to-income ratios and stagnant wage levels in developing economies. These factors have made homeownership unaffordable for many young people, especially with the impact of the pandemic on the housing market.
The ASEAN bloc has experienced economic growth over the last few decades, but this has resulted in a shortage of affordable housing in many capital cities such as Ho Chi Minh City. As a result, lower-income segments among young generations could only do so much without regulatory support.
One potential solution to curb speculative buying is through tax penalties and tighter mortgage rules. However, these measures are not foolproof and may impact younger property seekers who are at the beginning of their careers and have yet to build up resources for their first purchase.
It is important for governments to consider implementing policies that balance affordability while also preventing real estate bubbles from forming. In addition, providing easier access to financing options can help more individuals achieve their dream of homeownership despite the challenges posed by high home-price-to-income ratios and stagnant wage levels in developing economies.
Impact of speculative buying and low-interest-rate environments
Speculative buying has been a significant consequence of the low-interest-rate environment in Southeast Asia, which has led to unsustainable capital value growth in some cities.
As a result, many property seekers, especially first-time buyers, are finding it increasingly challenging to get onto the property ladder. Regulatory measures such as tax penalties and tighter mortgage rules have been put in place to curb speculative buying and encourage end-use purchases. However, the effectiveness of these measures remains unclear.
Despite attempts to cool down the market with regulatory support, younger property seekers at the beginning of their careers still struggle to purchase their first homes due to limited resources. For instance, cooling measures implemented in South Korea ended up locking low- and middle-income groups from purchasing homes over the past three years.
As a result, it is crucial for policymakers across Southeast Asia to find ways to balance economic growth with fair housing policies that can provide affordable homeownership opportunities for younger generations.
Potential for an unaffordability crisis for Generation Z
The looming unaffordability crisis for the next generation of homebuyers in Southeast Asia is a ticking time bomb that threatens to explode and leave behind a trail of shattered dreams and missed opportunities. As housing prices continue to rise at an alarming rate with stagnating wages, young adults are finding it increasingly difficult to achieve their homeownership goals.
The changing aspirations of Generation Z, who seek independence from their families, could prove to be a major challenge as they face unprecedented hurdles in trying to purchase their first homes. Policy measures such as tax penalties, lower loan-to-value ratios, price controls, and tighter mortgage rules may help spur first-time home buying for end-use.
However, these measures alone may not be enough to address the affordability crisis that looms large over Southeast Asia’s youth. It’s important for governments across the region to take proactive steps towards creating more affordable housing options for young adults who are struggling to get onto the property ladder.
Desire for Homeownership among ASEAN Youth
You may be interested to learn that despite the tight-knit family culture in Southeast Asia, up to 84% of millennials still intend to move out over the next year.
Factors influencing this desire for independence include filial piety, social norms around marriage and unmarried status, and a growing interest in sustainable living.
However, economic factors such as high home-price-to-income ratios and stagnating wages make homeownership elusive for many young people in the region.
Statistics on the percentage of millennials intending to move out within the next year
If you’re a Southeast Asian youth, chances are that even if you still live with your parents, you might have plans to move out within the next year. As much as 84% of millennials in Singapore and Indonesia intend to do so. However, this desire for independence is not without its challenges.
Filial piety and cultural influences play a significant role in keeping young adults living with their families for longer than in other parts of the world. Affordability challenges also contribute to delaying homeownership goals among millennials.
In Southeast Asia, high home prices relative to income levels make it difficult for young people to enter the property market. As a result, renting remains a popular option among youth who cannot yet afford to buy their own homes. Nonetheless, the desire to move out and achieve independence remains strong among ASEAN millennials despite these obstacles.
Factors influencing the desire for independence and moving out
If you’re a young person in Southeast Asia, there are various factors that might make you want to achieve independence and move out of your family home.
For one, lifestyle choices play a big role in the aspirations of millennials and Gen Zers. They value experiences over material possessions, such as frequent travel or dining out, which leaves little room for saving up for a home. However, recent surveys show that some young people are now shifting their focus towards tangible assets like sustainable homes with access to green spaces and EV charging points.
Additionally, policy measures can also influence the desire for independence among younger generations. In countries like Singapore where public housing covers 80% of the population and financing is readily available, it’s easier for young people to achieve homeownership. On the other hand, lower-income segments may struggle without regulatory support like tax penalties or tighter mortgage rules to curb speculative buying.
Thus, social and economic factors continue to play a significant role in shaping the property ladder landscape for millennials and Gen Zers alike.
Social and economic factors
Get ready to explore how social and economic factors impact the ability of Southeast Asian youth to achieve their homeownership goals.
In this region, filial piety and affordability in housing markets are two key factors that hinder the buying ambitions of young property seekers. Cultural influences on homeownership, particularly filial piety, still hold sway in Southeast Asia, despite increasing modernization. Higher-than-average ages of first marriage and lower rates of marriages mean that millennials in the region have not felt as much pressure to move away from their families compared to millennials in other parts of the world.
A potential unaffordability crisis for Generation Z looms large due to high home-price-to-income ratios in Southeast Asia. While Vietnam, Cambodia, and Philippines have experienced a sharp rise in middle-class population resulting in a shortage of affordable housing, stagnating wage levels across developing economies further exacerbate the issue.
Unless regulatory support is provided by governments through measures like tax penalties or tighter mortgage rules, it may become increasingly challenging for lower-income segments among young generations to achieve their homeownership goals.
Changing aspirations and lifestyle choices
Lifestyle aspirations and environmental preferences are also changing the way young Southeast Asians approach homeownership. Millennials and Generation Z tend to prioritize experiences over tangible assets like homes and cars, favoring travel, eating out, and attending live events.
However, one in three millennials still looks to purchase a luxury home in the long term, citing dependable long-term investment and social status as reasons.
Digital natives all their lives, Generation Z favors access over consumption and tends to make ethically informed buying decisions. Young Asian home buyers factor in good air quality, proximity to green spaces, and access to good healthcare when choosing a residences.
About 46 percent of millennials in Singapore are willing to pay more for sustainable estates with EV charging points. While regulatory support has been suggested as a solution for first-time homebuyers among lower-income segments, it is not enough without further consideration of changing lifestyle preferences among these generations.
Generational Differences: Millennials and Generation Z
Where do you stand on the property ladder as a millennial or member of Generation Z?
While millennials have been criticized for delaying their homeownership goals, Generation Z is focused more on access over ownership.
Young Asian home buyers are placing importance on air quality, green spaces, and eco-friendly features in their residences.
Where Do Gen Z and millennials stand on the property ladder?
It’s nearly impossible to scroll through social media without seeing a post from a young adult claiming they’ll never be able to afford a house, but the truth is that owning a home is becoming increasingly difficult for the younger generations.
Cultural influences, affordability challenges, and policy initiatives are all impacting Gen Z and millennials’ homeownership aspirations in Southeast Asia.
Filial piety still holds sway in many parts of the region, resulting in less pressure for younger individuals to move away from their families compared to other parts of the world. This has contributed to a lack of demand for rental culture and made it harder for those seeking independence to purchase their own homes.
Affordability challenges further exacerbate these issues with high home-price-to-income ratios due to stagnant wage levels and unsustainable capital value growth driven by speculative buying in some cities.
Policy initiatives such as tax penalties, lower loan-to-value ratios, price controls, and tighter mortgage rules may encourage first-time home buying for end-use but can also lock low- to middle-income groups out of purchasing homes entirely.
As such, Generation Rent could soon become Generation Buy if regulatory support doesn’t arrive promptly.
Generation Z's focus on access over ownership and environmentally informed buying decisions
Younger generations in Southeast Asia are prioritizing access over ownership and making environmentally informed buying decisions, signaling a shift from traditional materialistic values and a growing awareness of the importance of sustainability.
Digital natives all their lives, Generation Z is leading the charge towards the gig economy and favoring access to goods and services rather than owning them outright. This means that they are more likely to rent or use shared spaces rather than purchasing their own homes or cars.
Furthermore, young Asian home buyers tend to factor in good air quality, proximity to green spaces, and access to good healthcare in their choice of a residences.
A staggering 46 percent of millennials in Singapore are willing to pay a premium to live in ‘green towns’ or sustainable estates while around one in three millennials is also willing to pay more for properties with EV charging points.
It seems that younger generations are looking beyond traditional lifestyle choices and seeking out homes that align with their values of sustainability and environmental responsibility.
Specific preferences of young Asian home buyers
Asian homebuyers of younger generations are willing to pay more for properties with environmentally sustainable features such as EV charging points and proximity to green spaces, reflecting a shift towards values-driven purchasing decisions.
According to reports by Knight Frank and PropertyGuru, around 46% of millennials in Singapore are willing to pay a premium to live in “green towns” or sustainable estates while one in three millennials is also willing to pay more for properties with EV charging points.
Furthermore, young Asian homebuyers tend to factor in good air quality, proximity to green spaces, and access to good healthcare when selecting new homes.
The pandemic has put health and wellbeing into the forefront of younger generations’ consciousness when selecting new homes. This trend is reflected not just in their preferences but also their ethically informed buying decisions.
As digital natives all their lives, Generation Z prefers access over consumption and tends to make purchases that align with their values. Thus, developers who take into account these environmental concerns may be better positioned for success among Asian millennial homebuyers who are seeking long-term investments that align with their values.
Importance of air quality and green spaces
Breathing fresh air and enjoying green spaces are increasingly important to homebuyers in Southeast Asia. They prioritize health and wellbeing in the wake of the pandemic. According to a report by Knight Frank, young Asian home buyers tend to factor in good air quality, proximity to green spaces, and access to good healthcare when choosing their a residences.
In fact, a staggering 46% of millennials in Singapore are willing to pay a premium to live in ‘green towns’ or sustainable estates. This trend is not limited to Singapore alone. Around one-third of millennials across Southeast Asia are also willing to pay more for properties with eco-friendly features such as EV charging points.
As Generation Z becomes more conscious about environmental issues and sustainability, these preferences are expected only to increase further over time.
Emphasis on sustainable and eco-friendly features
As sustainability becomes more of a priority for homebuyers in Southeast Asia, properties with eco-friendly features like EV charging points are becoming increasingly sought-after.
Younger generations, particularly Gen Z and millennials, tend to prioritize access over ownership and factor in good air quality, proximity to green spaces, and access to healthcare when choosing their a residences. In fact, around one in three millennials is willing to pay more for properties with EV charging points, while 46 percent of Singaporean millennials are willing to pay a premium for sustainable estates or “green towns.”
Moreover, ethical buying decisions also come into play as young Asian home buyers prefer to make informed choices that align with their values.
McKinsey reports that Gen Z prioritizes the “search for truth” over status symbols or experiences. This trend is reflected in the younger generations’ preference for eco-friendly features as they become more conscious of their impact on the environment and seek out ways to live sustainably.
Balancing measures to avoid hindering young people's entry into the housing market
Navigating the complex landscape of affordable housing policies in Southeast Asia can be like walking a tightrope, but finding balance is crucial to ensure that young people aren’t left behind.
Regulatory support must be provided to ease their entry into the market while balancing measures are taken to avoid hindering them from making their first purchase.
Changing aspirations and cultural factors make it important for policymakers to strike a balance between encouraging property ownership and preventing speculative buying.
Tax penalties, lower loan-to-value (LTV) ratios, price controls, and tighter mortgage rules may spur first-time home buying for end-use, but they are not foolproof measures.
In South Korea, cooling the market only ended up locking the low- to middle-income groups from purchasing homes over the past three years. This has impacted younger property seekers in particular who have yet to build up resources for their first purchase.
Tax penalties and regulations on speculative buying
Tax penalties and regulatory measures are often used to curb speculative buying in Southeast Asia’s housing market. While these measures may help prevent further price hikes, they also have the potential to hinder young people’s entry into the property ladder.
For example, lower-income segments among young generations could only do so much without regulatory support. Tools like tax penalties and regulations on speculative buying may spur first-time home buying for end-use, but they are not airtight measures. In some cases, these measures can even lock low- to middle-income groups from purchasing homes altogether.
In South Korea, cooling the market ended up locking younger property seekers out of purchasing homes over the past three years. This is particularly detrimental for those who are at the beginning of their careers and have yet to build up resources for their first purchase. So while regulatory measures may be necessary to address affordability issues in Southeast Asia’s housing market, it is important that policy-makers carefully consider their impact on young people trying to enter the property ladder.
And speaking of policies that affect first-time homebuyers, lower loan-to-value (LTV) ratios and tighter mortgage rules can also pose challenges for young people looking to buy their first home. These policies limit how much money banks can lend individuals based on factors such as income level or credit score.
While these policies aim to reduce financial risk for banks and ensure responsible borrowing practices among consumers, they can make it harder for young people with limited credit histories or income levels to qualify for mortgages or obtain sufficient funding for real estate purchases. Therefore, policymakers need to strike a balance between protecting financial institutions and creating opportunities for younger generations trying to get onto the property ladder.
Lower loan-to-value (LTV) ratios and mortgage rules
Lower LTV ratios and tighter mortgage rules can create challenges for young people trying to buy their first home, as they limit the amount of funding that banks can provide based on income and credit score. While these measures aim to curb speculative buying and prevent housing bubbles, they also make it difficult for those without inherited wealth to enter the property market.
In some countries like South Korea, where cooling measures have been implemented in recent years, younger generations are finding it increasingly difficult to gather enough resources for their first purchase. Despite the drawbacks of such regulatory support, policy initiatives are still necessary to ensure a level playing field for all property seekers.
For example, Singapore has implemented schemes such as the Home Ownership Plus Education (HOPE) scheme and the Enhanced Central Provident Fund (CPF), which provide financial assistance and education on home ownership to low- and middle-income families. These policies have helped many young people achieve their homeownership goals while managing debt responsibly.
Examples of policy initiatives and their impact on young property seekers
Policy initiatives positively impact young property seekers in Southeast Asia by providing financial assistance and education on homeownership. This can be seen in Singapore’s Home Ownership Plus Education (HOPE) scheme and Enhanced Central Provident Fund (CPF).
Through the HOPE scheme, first-time homebuyers receive a grant of up to SGD 20,000 to purchase a resale flat or executive condominium. Additionally, CPF contributions have been increased for those looking to buy their first homes. These policies aim to ease the burden of rising home prices while supporting young generations’ aspirations for homeownership.
However, despite these efforts, some argue that policy initiatives alone may not be enough to address the affordability crisis and generational differences in housing aspirations. While schemes like HOPE and CPF provide financial support, they do not necessarily address the root causes of high home prices or cultural attitudes towards homeownership.
Furthermore, these policies may disproportionately benefit higher-income earners who can qualify for larger grants or contribute more towards their CPF accounts. As such, policy initiatives must be coupled with broader systemic changes that promote more inclusive and sustainable housing markets.
The Potential of Inherited Wealth
Let’s discuss where you, as a member of Gen Z or millennial generation, stand on the property ladder and what implications it has for your desire and ability to achieve homeownership.
With high home-price-to-income ratios in Southeast Asia and stagnant wage levels in developing economies, owning a home can be challenging for younger generations. However, there may be opportunities to overcome these challenges and secure a place on the property ladder with potential inherited wealth from parents or grandparents who own property.
Our Final Thoughts On Young Asians Buying Property in Asia.
As the pandemic continues to exacerbate housing affordability issues in Southeast Asia, younger generations are facing unique challenges when it comes to achieving their homeownership goals. While millennials have been dubbed ‘Generation Rent’ due to delayed homeownership, Generation Z may soon become the true heirs of this label as they face even greater obstacles in the future.
However, lifestyle choices and environmental preferences may also play a role in shaping their attitudes towards homeownership. For Generation Z, who are torchbearers of the gig economy and favour access over consumption, owning a home may not be a top priority. Instead, they tend to make ethically and environmentally informed buying decisions when it comes to choosing their a residences.
Good air quality, proximity to green spaces, and access to good healthcare are factors that young Asian home buyers consider important. Additionally, around one in three millennials is willing to pay more for properties with EV charging points.
Policy initiatives such as tax penalties on speculative buying or tighter mortgage rules may spur first-time home buying for end-use among lower-income segments among young generations. However, these measures may not necessarily be enough without regulatory support from governments across Southeast Asia.
It remains unclear whether environmental concerns will ultimately drive demand for sustainable homes or if policy changes will lead to increased affordability for all those looking to enter the property ladder.
Frequently Asked Questions
What are some specific factors that young Asian home buyers tend to consider when choosing a a residence?
Are you a young Asian home buyer looking for a residence?
According to reports, design preferences, location factors, and financing options are top considerations. Young buyers tend to prefer homes with good air quality and proximity to green spaces. Access to healthcare is also important.
Sustainable estates or ‘green towns’ are popular among millennials who are willing to pay a premium for these features.
As for financing options, public housing covers 80% of the populace in Singapore and financing is readily available. However, Southeast Asia suffers from some of the highest home-price-to-income ratios due to stagnating wage levels in developing economies.
Tools like tax penalties and tighter mortgage rules may spur first-time home buying but they are not foolproof measures.
How do millennials differ from previous generations in their spending habits and priorities?
Millennials differ from previous generations in their spending habits and priorities. Due to immense pressure from social media, they tend to prioritize experiences like frequent travel, eating out, and live events over tangible assets like a car or house.
This is reflected in their budgeting strategies as well – one in three millennials looks to purchase luxury homes priced above SGD5 million in the long term, with 30% citing ‘social status’ as a reason for purchase. However, they also consider lifestyle choices such as good air quality, proximity to green spaces, and access to good healthcare when choosing a residences.
Additionally, generational values play a role as well – while filial piety still holds sway in Southeast Asia despite progressive generations, millennials’ little siblings from Generation Z are torchbearers of the gig economy and favour access over consumption.
What percentage of millennials in Singapore are willing to pay more to live in sustainable estates?
Looking for a sustainable estate to live in? You’re not alone. According to a survey by PropertyGuru, 46% of millennials in Singapore are willing to pay more for green towns or sustainable estates.
Sustainability preferences are just one factor in the complex equation that is homeownership for Southeast Asia’s youth. Affordability concerns and location priorities also play a role, as stagnant wages and unsustainable capital value growth make it difficult for many young people to get onto the property ladder.
Despite these challenges, Generation Z is showing signs of desiring independence from their families and seeking out their own pads, while millennials continue to prioritize long-term investments like luxury homes.
What are some potential tools that could be used to spur first-time home buying for end-use?
To spur first-time home buying for end-use, there are potential tools that could be used.
Homeownership incentives such as tax penalties, lower loan-to-value (LTV) ratios, price controls, and tighter mortgage rules may help. However, these measures are not foolproof and may not reach lower-income segments of young generations without regulatory support.
Digital platforms can also help increase financial literacy among millennials and Gen Z, allowing them to understand the property market better and make informed decisions.
Additionally, financial literacy programs can provide education on budgeting, saving for a down payment, and managing debt to prepare young buyers for homeownership.
How does filial piety impact the housing market in Southeast Asia?
In Southeast Asia, family expectations and cultural norms have a significant impact on the housing market.
Filial piety is still strong in this region, with many young people preferring to live with their families rather than move out.
In fact, the majority of millennials in Thailand and Indonesia cite taking care of parents as the top barrier to moving out over the next year.
This cultural norm has been further exacerbated by affordability constraints, making it difficult for young people to purchase their own homes.
Despite this, there remains a strong desire among ASEAN youth to move out into their own pads.