Changing demographics,older buyers and smaller households are driving demand for smaller homes

From January to November 2024, sales of two-room flats nearly doubled compared to 2020. Transactions for three-room flats increased by 30%, four-room by 27.7%, and five-room units by 13.7%. Resale prices also rose significantly, with two-room flats seeing a 45.4% increase and three-room flats a 41% rise from 2020 to 2024.

Several factors contribute to the heightened interest in smaller flats, particularly two- and three-room units. One major reason is the increase in the number of these flats reaching their minimum occupation period (MOP). From 2019 to 2024, 15,462 two-room and 23,556 three-room flats reached MOP, significant increases from previous years.

Demographic changes, such as an aging population, smaller household sizes, and more singles living independently, have further boosted demand. ERA Singapore’s Eugene Lim noted that smaller flats are more affordable, attracting singles and small families with tighter budgets. The average HDB household size decreased from 3.4 people in 2014 to three in 2023.

Older residents may downsize to smaller flats to unlock equity and ease upkeep. Property agents reported that most of their transactions in 2024 involved three-room flats, with clients including singles, the elderly, and young couples.