Do BTOs lead to early marriage and divorce?
The quintessential Singaporean dream: a loving family in a cosy HDB flat. But is the journey to achieving this dream putting a strain on young couples' marriages?
That's the question raised by the third instalment of the Kiasunomics book series by NUS Business School professors, suggesting a surprising link between Singapore's beloved Build-to-Order (BTO) scheme and a rise in divorce rates.
The book dives deep into the unique economic behaviours of Singaporeans, analysing a treasure trove of data spanning from 1996 to 2011. Their research reveals a compelling trend: the BTO system, designed to provide affordable housing, might be inadvertently encouraging early marriages, potentially leading to financial pressures and ultimately, higher divorce rates.
Professor Sing Tien Foo, Provost's Chair Professor at the NUS Department of Real Estate and one of the book’s authors, told Lianhe Zaobao that young couples may impulsively apply for a flat that is too big and put themselves under financial pressure.
The research shows that BTO dwellers are significantly younger than resale flat residents, highlighting the scheme's popularity among young couples eager to start their lives together. "Some couples might not be financially prepared for the mortgage burden, especially if they have lower incomes and rely on cash for their payments."
This financial strain, he argues, can easily spill over into marriage, leading to arguments and resentment, especially when financial support from families is limited.
Adding another layer is the Minimum Occupation Period (MOP), a five-year requirement for BTO flats. The study reveals a spike in divorce rates among BTO residents five years after their marriage, coinciding with the end of the MOP, suggesting that some couples may be holding on to their marriages until they are free to sell their flats.
"It is possible that the BTO scheme, while offering a path to homeownership, also creates a financial incentive for couples to delay their divorce until the MOP is over," said Prof Sing.
The study goes further, examining the spending habits of BTO couples compared to single residents in resale flats. It found that BTO couples spend significantly less on necessities, suggesting a conscious effort to tighten their belts and manage the financial burden of their mortgages.
This constant financial pressure, combined with the emotional complexities of a rushed marriage, can create a breeding ground for marital discord.
While Prof Sing acknowledged that several factors beyond finances could contribute to divorce, he emphasised the study's clear correlation between the BTO scheme, marriage, and divorce rates, saying that further research is necessary to explore the complexities of this relationship and advocated for a multi-pronged approach to tackle these housing-related issues.
Associate Professor Ang Swee Hoon, from the NUS Department of Marketing, added another dimension to the discussion by highlighting the growing credit card debt among Singaporeans. She pointed to the "illusion of saving" created by cashback rewards, which can lead to overspending and debt accumulation.
"The chase for cashback can encourage overconsumption," Prof Ang cautioned. "People feel like they are saving money, leading them to spend even more, eventually increasing their debt."
Kiasunomics 3 analyzes various aspects of Singaporean life, including climate change, property prices, and inflation, using evidence-based analysis. Royalties from the book will be donated to provide scholarships and bursaries for NUS Business School students.
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