Why People Residing in Private Properties May Experience A Lower Rise in Living costs Than Those In HDBs

 Why People Residing in Private Properties May Experience A Lower Rise in Living costs Than Those In HDBs

Every five years, the Singapore Department of Statistics collects detailed information on resident household expenditure in Singapore. The most recent study, conducted in 2021/18, was published in July 2021.

This study is performed on the regular 5-year basis to understand what Singaporean households are spending each year, as well as on what basket of products. This can be a good guide in determining changes consumption patterns and requires of people residing in Singapore.

When the Set of Household Expenditure Survey 2021/18 first came out, we did a quick analysis, and learned some quite interesting earning and spending trends about Singapore households.

In this short article, we look closer at the increase in spending patterns of those living in condominiums and landed properties (aka private properties) than others residing in HDBs. Of course, the reason we did this was due to the title want to know , – those living in HDBs experienced a significantly faster increase in spending than others residing in condominiums and landed properties.

Average Increase In Singapore Household Expenditure From 2012/13 To 2021/18

We all understand that our expenses will climb every year – that's a result of inflation and increasing standards of just living in Singapore. Obviously, another reason we might also save money is a result of our own lifestyle inflation, but that's within our control, while the first couple of aren't.

Read Also: Core Inflation Vs Lifestyle Inflation: What are the differences and just how Do They Affect Your Retirement Plans?

In the chart around the left below, we are able to observe that Singaporean households spent 0.8% more every year between 2012/13 and 2021/18. This was more than 5x less than the increase in household expenditure incurred within the 5 years just before that, from 2007/8 to 2012/13.
Source: Report around the Household Expenditure Survey 2021/18

In some methods, this shows that Singaporean households did not have to struggle with as high a yearly rise in household expenditure within the newest 5-year period compared to the one prior to that.

Singapore Household Expenses: Those Living In Condos and Landed Properties VS Those Living In HDBs

When we looked at how much each person within Singaporean households are spending, based on their property type, we noticed a pattern that jumps out.

Source: Report on the Household Expenditure Survey 2021/18

Firstly, we can see that those living in HDB Flats experienced a yearly increase of two.4% in their household expenditure between 2012/13 to 2021/18. It was significantly higher than those residing in Condominiums & Other Apartments and Landed Properties, who only spent 0.6% and 1.1% more every year in the past 5 years respectively.

This was consistent throughout all HDB housings types – where, typically, family members were spending more every year than others residing in private households.

This is within contrast towards the previous 5-year period (the bars in orange), where private household members spent more than those living in HDB Flats. One more thing that people noted was those residing in HDB 1- & 2-Room flats experienced the highest increase in their annual household expenses across both 5-year periods.

Why Are Private Households Spending Less Than HDB Households Each Year?

Firstly, as pointed out above – in the 5-year period between 2007/08 and 2012/13, private households experienced a steeper increase in expenditure when compared with HDB households. This shows that private households are not consistently experiencing lower rise in their household expenditure, compared to HDB households.

Nevertheless, it might still feel unjustified this is happening in Singapore. Here are some reasons (within our opinion) that could account for why this has turned up within the stats.

# 1 Changes In Real Income

One reason why the those living in Condominiums & Other Apartments and Landed Properties experienced slower development in household expenditure is because these household types also experienced lower growth in real wages.

Again, this could only explain part of the situation, as the 5-year period between 2007/08 and 2012/13 also saw them experiencing lower development in real wages, while growth in their household expenditure was at to the next stage.

Source: Report on the Household Expenditure Survey 2021/18

# 2 Increase In Household Expenses Mainly Occurred In Non-Discretionary Areas

Looking at in which the increases in households expenses occurred may be important as well. As possible see in the chart below, several expense areas decreased from 2007/08 to 2012/13.

The areas where household expenditure increased were Food, Educational Services, Health, Communication, Accommodation Services and Others. With the exception of the Others category, the rest of the areas can be viewed as non-discretionary areas, where families need to save money on it doesn't matter how well-off they are.

The discretionary expenses categories, such as Housing and Related Expenditure, Recreation and Culture and Clothing and Footwear categories experienced a decline in overall expenditure levels.

Source: Report around the Household Expenditure Survey 2021/18

# 3 Actual Increase In Spending Was Level Across Housing Types

The point above segues into this point – since most of the rise in spending occurred in areas which were non-discretionary.

This levels the field across all housing types, because they had to incur these expenses no matter their circumstances. This shows in the data as well, with the chart below showing how much more each housing type spent from 2012/13 to 2021/18.

The increase was quite similar, with HDB Flats households spending $125 more, Condominiums and Other Apartments household spending $44 less, and Landed Properties households spending $94 more.

While the nominal amount is very close, inside a couple of hundreds, the percentage amount is a lot more stark – as those residing in HDB Flats are coming off a lesser base, and people living in private properties coming off a greater base.

Source: Report on the Household Expenditure Survey 2021/18

# 4 Demographic Transfer of Yesteryear 5 Years

In this argument, we think that those living in private households may be older families who have worked longer coupled with more time to accumulate sufficient wealth to purchase such properties.

Using this premise, we reason that since Singapore is really a rapidly ageing country, more of these households have retired or nearing retirement, where they struggle to preserve wealth rather than spend.

# 5 More Shoe Box Private Homes In Recent Years

As shoe box private homes have become more prevalent in recent years, and only curbed ultimately of 2021, more prudent and less well-off couples might be able to afford private homes.

After stretching to afford these homes, this group of couples may have to be extra prudent using their expenses in other areas.

# 6 Transfer of Consumption Patterns

This could be a sub-set of point 2 above – where household may be prioritising non-discretionary expenses, and hence experiencing a level rise in expenses in nominal value.

Another interesting consumption pattern we should understand is how less well-off households might be less savvy spenders. Actually, Channel NewsAsia did a tale and video interview about how those trapped in poverty were at higher risk of making poorer decisions.

Private households were also found to be spending a greater number of their household expenditure online compared to other household types. Typically, online purchases are created together with detailed comparisons across brands/products and after reading reviews of merchandise, which might ultimately yield better value web hosting households.

Source: Report on the Household Expenditure Survey 2021/18

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