The truths behind our higher incomes in census 2020

The Department of Statistics (DOS) released the latest Singapore Census of Population 2020 last month. Census 2020 surveyed 150,000 resident households last year. The results show that Singapore residents are earning higher incomes. Also, those households in the highest income bracket of $20,000 and over make up the biggest group of 13.9 percent.

Did census 2020 show that Singaporeans are more affluent? Is this good news for the private home market?

Isn’t this odd or ironic when Singapore has just declared its worst recession in 2020? Should we question why more can afford private homes when local banks have approved 34,000 mortgage relief applications only by last October? Do you feel bitter or out of place when many can do better than you with higher incomes and staying in condominiums?

As usual, I like digging deep into the numbers to see what they are trying to show me. In this blog post, I will answer four key questions regarding Singapore’s current household incomes. Read on if you want to know what the local media didn’t tell you.

• Who are the highest income earners in Singapore?
• What is the real picture of Singapore’s household income?
• Why are more residents staying in condominiums compared to HDB flats?
• Why many Singaporeans can’t afford private homes despite higher incomes?

Question #1: Who are the highest income earners in Singapore?

In 2020, 190,514 or 13.9 percent resident households earn $20,000 and over. How are Singapore’s typical highest income households look like?

• 55 percent of them have two employed persons in the household. One and three employed persons in the household both occupy 16 percent in this group.

• 61 percent of these households are living in private homes (condominiums, apartments or landed properties). 39 percent stay in HDB dwellings, with 25 percent in 5-room and Executive Flats and 13 percent in 4-room flats.

• 65 percent are two-generation families. 75 percent have children staying with them.

• 27 percent are 4-person households while 23 percent have 5 persons living together.

• For the household reference person, 43 percent are aged 35 to 49 years and 33 percent are in the 50 to 64 age group.

• 83 percent of the household reference person are Chinese while 10 percent are Indians.

• 86 percent are professionals, legislators, senior officials and managers. 74 percent attained their highest qualification in university or above.

It is nothing new that resident households under the highest income bracket is the biggest group in census 2020. This same thing was found in census 2010 and census 2000 too. In 2010, 12.2 percent households had an income of $15,000 and over. In 2000, 12.8 percent made $10,000 and over a month. The difference is the extra $5,000 added to the highest income group every 10 years.

However, take note that census 2020 was conducted in the midst of Covid-19 from early February till end December last year. Respondents who submitted their completed survey over the Internet was 64 percent, followed by submission through CATI (Computer-Assisted Telephone Interviewing) at 25 percent and face-to-face interviews at 11 percent. We can’t deny the fact that the higher the income of invited respondents, the higher chance they have access to internet, computers and smartphones at home, and the higher their response rate. Therefore, the survey results may be biased.

Question #2: What is the real picture of Singapore’s household income?

Ministry of Manpower has just released the latest income figures on 30 June 2021. The median gross monthly income from work (including CPF contribution from employers) of full-time employed residents is $4,534. The figure is 51 percent higher than $3,000 in 2010. According to the DOS report released in February, the median household income in 2020 is $9,189.

Are Singaporeans having higher salaries? Yes and no. The higher income groups may be making more. But those in the lower income brackets may have difficulties catching up.

1) One-fifth of households are low-income families

In Singapore, low-income families are defined as having a total gross monthly household income of $4,500 or less, or per capita income of $1,125 or less. According to census 2020, resident households with income under $4,000 is 241,102 or 17.6 percent. Those under $5,000 is 311,814 or 22.7 percent. With either cutoff point, their percentage is much higher than the 13.9 percent of the highest income bracket of $20,000 and over.

2) 52 percent increase in households with no income

Singapore’s median gross monthly income has increased 51 percent from 2010 to 2020. On the other hand, the number of resident households with no income has increased 52 percent from 120,000 in 2010 to 182,445 in 2020.

If resident households with no employed person is 182,445 or 13.3 percent, it is comparable to the 13.9 percent households making $20,000 and over. A decade ago in 2010, households with no employed person is only 10.5 percent of total resident households.

Although the media reports that the average income of Singaporeans is on the rise, the number of resident households with zero income has increased every year from 10.4 percent in 2014 to 13.2 percent in 2019. Among them, households with solely non-working persons aged 65 and above have gone up from 5.7 percent in 2014 to 7.9 percent last year.

– Behind The Scenes of The Property Market

Question #3: Why are more residents staying in condominiums compared to HDB flats?

Census 2020 newspaper headlines told us that more Singapore residents are living in condominiums or private apartments compared with a decade ago. It is an impressive jump from 11.5 percent to 16 percent. On the other hand, HDB dwellers are down from 82.4 percent to 78.7 percent.

With higher incomes, more Singapore residents can afford to upgrade to condominiums. This is good news for developers who have private residential projects launched a few years ago but still have considerable unsold units.

Let me share with you my own research with figures downloaded from the DOS app: From 2013 to 2020, the number of private residential dwellings has increased close to 53 percent from 214,150 to 327,140. Coincidentally, during the same period, the number of households by dwellings in condo and other apartments also increased 53 percent from 143,700 to 220,100.

Why are more Singaporeans staying in condominiums compared with ten years ago? Because developers are building at a fast pace in the last decade. It is common sense that with more construction and completion of private homes, more Singaporeans are occupying them.

Question #4: Why many Singaporeans can’t afford private homes despite higher incomes?

The Straits Times have uplifting headlines that we have “higher incomes in Singapore” and “more Singapore residents living in condos”. So, when is your turn to upgrade from your HDB flat?

Let’s try to crunch the affordability numbers. These days any decent-size condominium unit will easily come with a price tag of $1.5 million. Assume this is your first private property purchase and your age can allow you to apply for a mortgage with the maximum tenure of 30 years. If you have no other debt or loan repayment, you can borrow a maximum loan-to-value of 75 percent.

Property price: $1,500,000
Downpayment: $375,000 (cash and/or CPF)
Loan amount: $1,125,000
Interest rate: 1.5 to 2 percent
Monthly payment: $3,883 to $4,159

Use the online affordability tool of a local bank to run the numbers. With TDSR, the bank will approve your $1.125 million housing loan if you have a minimum monthly salary of $9,000 or above. Any property agent who told you a household income of $6,000 can afford a condo unit, or even two with one for you and one for your spouse, is a joke.

However, with a monthly repayment of $3,883 to $4,159, 43 to 46 percent of your household income will be gone for settling your mortgage every month. According to my 3-3-5 affordability rule, you should not spend more than one-third of your income to pay for your monthly mortgage. That leaves you with three options:

1. Lower your home purchase budget to $1.15 million;
2. Find a way to boost your household income to minimum $12,000 per month; or
3. Wait for the dwindling of desperate Covid-19 homebuyers and the high prices to go down.

Food for thought

Why should we be cautious despite higher incomes?

Last Friday (July 2), a report published by the Institute of Policy Studies think tank said that more than half of Singapore’s residents are worried about their job security and employment prospects. Younger respondents aged 21 to 35 generally expressed more fears. The 36 to 50-year-olds “have heightened worries because they face competition from younger employees” and “are also more likely to have children still in their school-going years”.

If my answers to the four income questions upset you, please accept my apology for being straight-forward. As a fellow homebuyer and investor, I don’t see any reason holding back the not-so-good numbers and unpleasant findings. At times I wish I could have the same optimism as those media, analysts, banks, developers and agents out there.

However, I am not being pessimistic. I am being realistic. Over the years, I have learned that a pessimist usually has more knowledge and insights than an optimist.

If you need advice on property matters or residential properties in Singapore, you can check out my personal consultation service.

My new book Behind The Scenes of The Property Market is now available for preview and order online. You can also check out my online courses.