Property no longer a reliable source of retirement funds

As previously reported, DBS' most recent analysis shows that investing in real estate for retirement money is no longer as financially secure (SBR).

This comes when work-from-home arrangements are expected to make housing affordability worse, leaving homeowners with little alternative except to build larger houses. Prices are also predicted to reach multi-year highs in the income-to-price ratio.

According to the findings, the increase in property prices has outpaced that of wages and the GDP (GDP). Before, buying a smaller house meant paying a more excellent cost per square foot (PSF).

There will be an increase in the number of families with two incomes due to the rise in the number of people working from home.

In addition, the demand for residential homes is likely to change due to the shifting demography. The estimated rental yield and long-term need for dwellings will be impacted by factors such as stricter labour restrictions and an ageing population.

Retirement planning and home affordability were shown to be problems for several categories of customers.

According to the DBS, the most financially strained people earn up to $5,999 per month and those aged 30 to 49. This age group, according to the data, likewise has the lowest investment inclination.

Private property owners between the ages of 30 and 39 and 40 and 49 had the highest mortgage-to-income ratios, the study showed. The average balance for those in the 30 to 39 age bracket was 0.27, or 19% to 46%. The average ratio for those in the 40-49 age range was 0.26, or 19% to 39%.

DBS recommended customers concentrate on expanding their net worth via a diverse investment portfolio instead of purchasing property due to hefty purchase expenses.

As Lorna Tan, Head of Financial Planning Literacy at DBS Bank, told SBR, "consumers can regard their primary property as a retirement asset and a component of a holistic financial plan, they should keep in mind that diversification is crucial and the right mix of support can help to maximise the risk-reward from their investments.