Population demographics are often viewed as one of the most important fundamentals of the property market. The rationale is simple to understand. A growing population increases the demand for housing, and the younger the population, the better for property investors. This is because in the coming years, a relatively higher proportion of people can be expected to grow up, move out, start families and need their own homes.
However, all rules of thumb are only approximately correct. Various factors might eat away at their correctness. What factors might nibble down the "population demographics" property rule? Here are a few suggestions.
(1) An increasing average lifespan. The longer the average citizen lives, the longer the period of time he will require a home (thereby propping up the property market). Suppose for example that in the past the average citizen lived to age 65, but that in the future, the average citizen lives to 85. Then on average, he will contribute to housing demand for an additional 20 years.
(2) Decline of the extended family. In the past, it was very common to find extended families. For example, three or even four generations might share one roof. However, nowadays it is more common for young adults to move out upon getting married, and for their parents to live on their own. This leads directly to additional demand for housing.
(3) More singles living on their own. Nowadays, young people in Singapore may not even wait until they get married, before they move out. For the sake of privacy and independence, they may move out earlier, renting a place of their own if they cannot afford to buy one. This change in lifestyle norms would contribute to greater demand for housing.
(4) Low interest rates. If bank interest rates are perennially low, then more cash-rich individuals will be driven to park their cash in other assets, such as shares, bonds or property. Thus if you have an extra $500,000 to spare, then instead of putting it in a bank, you might well choose to use it to buy an additional apartment and rent it out (consider that DBS pays only 0.45% for a 12-month fixed deposit of $500,000).
(5) Increasing foreign ownership. If the laws of a country are favourable to foreign ownership of property, then foreign ownership of property will increase. The clearer and more transparent those laws are, the stronger that trend will be. Many of those foreigners don't even need to be living in that particular country. They are just high net-worth individuals who hunt around the world looking for places to park their cash.
(6) Divorce rates. According to Wikipedia, divorce rates in Singapore have doubled over the past decade. If this social trend persists and grows, in time we may expect to see, at any given time, a higher proportion of individual adults needing to rent or buy a new place, because they have just separated from their ex-spouse.