Despite a positive economic outlook in most ASEAN markets, financial challenges are hindering homeownership dreams, leading to a rise in renters, the so-called “Generation Rent.”
This trend is evident in a study by PropertyGuru Group, which surveyed consumer sentiment in Thailand, Singapore, Malaysia, and Vietnam.
The overall real estate sentiment index across the region remains positive, with Vietnam boasting the highest score (48%, up from 43%). Singapore (44%) and Malaysia (45%) also saw increases, while Thailand (48%) experienced a slight decline due to high interest rates and a sluggish economy.
Interestingly, Vietnam witnessed the strongest growth in homeownership aspirations, with 72% of consumers planning to purchase a home.
This is followed by Singapore (73%), Malaysia (70%), and Thailand (44%). However, a significant portion of potential buyers across all markets find current loan interest rates unreasonable (only 16-28% regard them as acceptable).
Despite global economic uncertainties, Southeast Asia’s economic stimulus policies seem to be paying off.
The Asian Development Bank’s Asian Development Outlook (ADO) report forecasts regional growth of 4.6% in 2024, up from 4.1% the previous year.
This, combined with declining inflation in several countries, is boosting consumer confidence and potentially spilling over to the real estate market.
Divergent Priorities Across Markets
Singapore: Affordability reigns supreme. A significant portion (40%) believe recent policy changes will make HDB flats more accessible.
Cost-effectiveness drives their preference for HDB flats (54%), though high rents (85% find them unreasonable) push some to seek homeownership.
Affordability remains a key concern, with price per square foot, size, and proximity to public transportation topping buying considerations.
Malaysia: Investment fuels property purchases (58%). However, financial hurdles abound, with nearly half (49%) having saved only half the needed amount.
Job instability and insufficient down payments pose financing challenges. Renting is a common alternative due to financial limitations (74%), with almost 40% aiming for homeownership within two years.
Price per square foot is the most important buying factor, reflecting the investment focus. Safety is the top external factor influencing purchasing decisions.
Vietnam: Similar to Malaysia, investment is the primary reason for buying property (60%). While over half (55%) have some savings, job instability presents a significant obstacle in securing loans (55%).
Land is the most sought-after property type (33%) due to its potential appreciation. Renting caters to those lacking funds (33%) or who prefer flexibility (27%).
Many Vietnamese renters (42%) plan to buy within 2 years, with most adjusting spending or finding cheaper alternatives if rents increase.
Thailand’s Housing Market: A Different Story
Unlike its neighbors, Thailand’s primary reason for buying a home is personal need (44% want more space), followed by investment (29%).
However, only 33% of those planning to buy have sufficient savings, while nearly half (47%) have saved only halfway.
Economic challenges further impact middle- and lower-income earners seeking loans, with over half (56%) citing unstable income and employment as the main obstacle.
Furthermore, over 61% of Thai renters lack sufficient savings, while 38% find housing prices too high.
Man hand hold the home model and the clear bottle with gold coin put inside with growing value on the wood in the public park, Loan or save money for buy real estate to family concept.ฺ
Despite lower demand, house prices haven’t fallen. In fact, Bangkok condominium prices increased by 8% year-over-year and 1% quarter-over-quarter (as of February 2024).
Overall house prices across all types of property have increased by 2% year-over-year.
The majority of Thai renters (31%) plan to rent for 2 years before buying, waiting for the economic situation to improve.
While internal buying factors prioritize residence size (46%), safety remains the most crucial external factor (47%) for long-term living decisions.
