Singapore's Build-To-Order (BTO) system may encourage young couples to get married early, but it may also increase the possibility of divorce, according to a study by researchers from the National University of Singapore (NUS) Business School.

The researchers studied data on Singaporeans aged 20 to 35 years old to see if there was a correlation between marriage and divorce rates, and applications for BTO flats.

The study was covered in a chapter of a recent book, "Kiasunomics 3: Economic Insights For Everyday Life".

The book was co-authored by Sumit Agarwal and Sing Tien Foo, professors at the NUS Business School, and Ang Swee Hoon, an associate professor from the same school.

It was officially launched on Jun. 4.

How the study was done

The researchers looked at the relationship between marriage and divorce rates on one hand, and application for BTO flats on the other.

They looked at data from 1996 to 2011.

Singaporeans between the ages of 20 to 35 years old were identified for the study. Researchers studied the marriage and divorce rates, as well as the consumption patterns of these individuals.

BTO residents tend to be younger

The average age of BTO residents was found to be around five years younger than residents in resale HDB flats.

An even larger gap was found when comparing the average age of those living in BTO flats to the average age of those in flats that were not in BTO districts, suggesting that young couples tend to choose to live in BTO flats.

Another possibility is that the BTO system influences early marriage.

A higher percentage of couples under 35 years old lived in BTO flats compared to other HDB residences, the study found.

Uptick in marriage rate coincides with introduction of BTO

Marriage rates for both young men and women also increased from pre-2000 to post-2010, which coincides with the introduction of the BTO scheme in 2001, and its subsequent expansion.

The rate for women aged 25 to 29 increased from 45 per cent to nearly 60 per cent.

The rate for men aged 30 to 34 increased from 22 per cent to 37 per cent.

Researchers suggest in order to secure a BTO flat from competing applicants, more women aged 25 to 29 may chose to get married at that age to be competitive in the marriage market.

It is also possible that more men aged 30 to 34 chose to marry as they were more financially stable.

Divorce rates increased

Divorce rates for women aged 30 to 34 increased from four per cent to 7.2 per cent when comparing data collected from the pre-2000 to post-2010 period.

For men aged 35 to 39, the divorce rate increased from 3.5 per cent to 6.3 per cent.

"This trend also coincides with the timeline of the BTO scheme with a five-year lag compared to the marriage pattern," said the authors.

The BTO scheme may have rushed marriage decisions, which increased the likelihood of subsequent marriages, the authors noted.

Spending patterns

The researchers also looked at consumption data of residents in BTO flats, finding that they had higher overall credit card expenditure than those who lived in resale HDB flats.

However, married BTO flat residents had less monthly credit card spending compared to singles in resale HDB flats.

This was possibly because BTO couples were cutting down on personal expenditure to save for mortgage payments, according to the study.

The authors stated:

"All in all, it appears that the BTO scheme spurs early marriages. However, financial conditions of young couples may take a toll on the marriage, especially when there is less financial support from the family."

Marrying for BTO eligibility?

The book chapter concluded with observations about housing affordability especially since the Covid-19 pandemic, noting that young couples still "gravitate" towards BTO flats in popular mature estates, which are more expensive.

Pointing to the financial challenges posed by home ownership in such circumstances, the authors concluded:

"Young couples need to save carefully for their mortgage payments even before they get the keys to their BTO flats. They should ensure that they are marrying for the right reasons – for love and not for the sake of being eligible for a BTO flat."

Book proceeds to be donated to bursaries and scholarships

All royalty proceeds from the Kiasunomics series will be donated to bursaries and scholarships in NUS Business School.

The initiative helps to provide financial aid to students and is meant to inspire a new generation to value and pursue economic research.

The book is published by World Scientific, and those looking to purchase a copy may use the code "KIASU20" for 20 per cent off the book on the World Scientific website.

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