Singapore in Numbers - Household Incomes vs Wealth

FYT has been studying the Singapore Household Incomes for a while now; we have considered it in various forms and measures such as

Household Incomes vs Household Income per person
How the above metrics are distributed across household (i.e. deciles, median, averages)
How households across the deciles live (where they live, and how they live)
How it has changed over the decades

In light of Singapore's rising cost of living, understanding these dynamics has become increasingly relevant for policymakers, businesses, and the public. Our findings indicate a positive trend: Singaporean households have witnessed consistent growth in incomes from 2000 to 2023 across all income brackets, with real income per person increasing by 49% from 2000 to 2022.

Click the image below to access the interactive dashboard where you can see it for yourself.

While household incomes have indeed risen, a common critique is the disparity between income growth and wealth accumulation, suggesting a widening wealth gap. Accurate wealth data is challenging to obtain due to confidentiality and the lack of reporting requirements. However, Singapore's well-regulated financial sector offers some insights at an aggregate level.

Singapore Household Assets over time

Data from the Department of Statistics shows a significant growth in household assets, increasing from SG$3.06M in 2000 to SG$8.64M in 2023. This change reflects a compound annual growth rate (CAGR) of approximately 4.8% or a 2.7-fold increase over 23 years. Property continues to feature prominently in Singapore Household Assets; making up 54% of total assets in 2000 but has fallen to 44% in 2023 even as absolute asset value has risen. Whether the asset growth was due to invetments in more property or appreciation of exist property is hard to tell. In land scarce Singapore where incomes have been consistently growing, the laws of demand and supply would suggest that asset appreciation would be a likely factor. The drop in HDB assets between 2013 and 2020 could possibly be attributed to the series of property cooling measures introduced by the government to maintain the affordability of Public Housing.

Notably, the composition of these assets has evolved; specifically, the steady rise in currency & deposits as well as CPF (retirement) funds, in fact, Currency and Deposits have exceeded the value of Public Housing. This could be attributed to some of the following factors:

Singapore households have significant liquidity; which gives them significant flexibility. While the recent interest rate hikes and economic uncertainty might prompt more to hold on to cash as opposed to other assets. Given that the increase in currency and deposits has been steady fordecades, it more likely points to Singapore households savings culture.
The rise in CPF is also expected, since government policy makes saving for retirement mandatory with a gauranteed returns of apprimately 2-4% which compoinds over time. It showed a rise in the rate of accumulation as new measures kicked in 2020 onwards that increases the contribution rates to cater to the ageing population's needs as retirement age was increased in the same period.

Singapore Household Liabilities over time

Parallel to the growth in assets, household liabilities also increased, from SG$600K in 2000 to SG$1.01M in 2023. Fortunately, Singapore households maintain a healthy financial stance, with assets significantly outweighing liabilities. The liabilities-to-assets ratio, a key indicator of financial health, improved from 0.19 in 2000 to 0.11 in 2023. Prior to 2004, pubic housing loans (HDB) were higher than bank loans as the funding for purchasing property; since 2004 bank loans (62% of liabilities) have far outstripped HDB loans (11%) to fund property purchases; which could be explained by several factors:

Since HDB (Public Housing) policies changed where HDB only starts building when new housing demand is confirmed, it has hampered the supply of new Public Housing units. This was intended to avoid a situation of over supply; but new applicants had to wait for 3-5 years for their unit. This prompted eager home owners to consider the resale of exitsing Public Housing units or private property.
The housing demand could have been driven by people looking to upgrade from their existing HDB units. These households are typically older and most established and thus exceed the income cap for public housing loans from HDB. They have to turn to private banks for their home loans.
Those in the higher income bracket may be looking to private properties instead; which are pricier but are more likely to show higher capital appreciation over time.

Singapore Household Net Worth

Amidst these observations, it's clear that Singaporean household wealth has grown alongside income. From 2000 to 2023, while average household income saw a 2.3-fold increase, net worth surged by 3.25 times. It's essential to note that these findings are based on averages, which, while indicating general trends, do not delve into the wealth distribution across households. Clearly much of the household net worth would probably be held by the higher income groups with enough disposable income and knowledge to invest; and thus leaving the lower income groups under-represented in household net worth. But Singapore is unique in that even the lower household groups typically own their own public housing; which will make the net worth distribution less uneven than other countries.

Despite these limitations, the data compellingly demonstrates that Singaporean households have experienced substantial wealth growth, outpacing income gains. This bodes well for navigating economic challenges, provided households continue prudent financial planning. While the narrative around wealth and income is complex, the overarching message is one of optimism for Singaporean households amidst economic uncertainties.