...
Commentary

The 3 ‘A’s of ASEAN Housing Dynamics

The rich cultural and economic diversity within ASEAN makes it hazardous to generalise family patterns and urban trends, but one thing is clear: rapid urbanisation over the next three decades will intensify resource scarcity. The increased strain on housing infrastructure exacerbates issues of adequacy, affordability, and accessibility in an already challenging housing market.

 Is homeownership in the ASEAN region an unattainable dream for generations to come? 

Imagine waking up in a city where the cost of housing appears to rise faster than the sun. This is the stark reality for countless individuals across the ASEAN region, where the dream of homeownership often feels like a distant mirage. The age-old lament of every generation that they have it worse than their parents holds true here. The rich cultural and economic diversity within ASEAN makes it hazardous to generalise family patterns and urban trends, but one thing is clear: rapid urbanisation over the next three decades will intensify resource scarcity. The increased strain on housing infrastructure exacerbates issues of adequacy, affordability, and accessibility in an already challenging housing market.

Adequacy: Are we running out of homes for the generations to come?

The figures paint a grim picture: closing the housing gap over the next three decades seems implausible. 

The numbers are staggering: a projected need for 245 million additional housing units by 2040. From Singapore to Jakarta and Manila, the housing backlog is a pressing issue that demands our attention. ASEAN is still reeling from the housing supply shocks of the pandemic, which grounded all construction activities to a halt. The convergence of a rapidly expanding population on track to reach 722 million by 2030 and a steady decline in household size pose a formidable threat.

SINGAPORE

A sight for sore eyes? A construction site sits idle in the usually bustling Singapore, in April 2020.
Read More

Housing Gap in Indonesia

Indonesia‘s Ministry of Public Works and Public Housing (PUPR) reports a daunting backlog of 12.7 million housing units, which will take 21 years to clear at the current construction rate of 600,000 units per year. 

Source: MORROW Intelligence

THAILAND

A half-built private property in Thailand remains unattended for months, as the central government orders the closure of hundreds of construction sites across the nation.
Read More

Housing Gap in Cambodia

Other ASEAN countries face similar issues: Cambodia‘s deficit is 1.1 million units, with a focus on high-end apartments unsuitable for most people. The extrapolation is based on... Cambodia building 50,000 units each year.

Source: MORROW Intelligence

INDONESIA

Indonesia’s new capital Nusantara, is put on hold pending the country’s response to COVID-19.
Read More

Housing Gap in Philippines

The Philippines may see a shortage of 11 million units by 2028 if government plans remain underfunded. 

Source: MORROW Intelligence

While the nuclear family unit remains sacrosanct in Southeast Asia, a decrease in marriage and fertility rates and an increase in migration has given way to a rise in one-person households, equally prevalent in rural areas (Viet Nam) and urban regions (other ASEAN countries). However, this demographic transition has not been adequately met with corresponding developments in housing construction, highlighting a growing disparity between evolving societal needs and infrastructure provisions. 

Some ASEAN cities are witnessing a supply overhang, despite the overall housing shortage and slow construction rates.  Malaysia’s 2022 report highlighted 27,746 unsold units worth RM18.41 billion, largely priced beyond the average buyer’s reach, leading to a lack of affordable housing. Are developers so ignorant about local demand that they neglect the needs of the average buyer?

In Thailand, rising interest rates have dampened purchasing power in Bangkok, exacerbating the housing glut. Cities dependent on foreign real estate investment are especially vulnerable to oversupply.

Affordability: Is the promise of homeownership simply flawed, or fundamentally broken?

Are informal settlements an inevitable inclusion to the progressively costly urban landscapes of developing nations?

Last year, for the ninth year running, Singapore retained its title as one of the most expensive cities to reside in. Despite a relatively lower median price-to-income ratio for public housing compared to its neighbours, housing affordability is a challenge as flat prices soar, with S$1 million public housing units becoming the new norm. In January alone, a record 74 such units were sold.

Academics use the median housing price-to-income ratio to gauge affordability. The World Bank considers a ratio below 3.0 affordable, 3.1-4.0 moderately unaffordable, 4.1-5.0 seriously unaffordable, and above 5.0 severely unaffordable. Recent data paints a troubling picture of ASEAN cities facing chronic housing unaffordability.

Rapid urbanisation in ASEAN has strained cities’ resources, leading to unaffordability and insecure tenure, fuelling the growth of informal settlements. Characterised by a lack of official tenancy, substandard living conditions, scant facilities, and overcrowding, the surge in informal settlements highlight systemic flaws in social inclusion and poverty reduction. 

Informal Settlements in Manila Bay (Source: Romina Cabrera)

In Jakarta, such informal settlements are affectionately referred to as kampungs. Kampungs have long been venerated as a precursor to formal urbanisation, with customary tenure rights trampled by state intervention. This raises a poignant question: How can kampungs, considered “unplannable”, be integrated into urban city planning?

Informal Settlements in Manila Bay (Source: Romina Cabrera)

Seraphinite AcceleratorOptimized by Seraphinite Accelerator
Turns on site high speed to be attractive for people and search engines.