Type Of Housing Singaporean Parents Own Can Impact Children's Future Economic Status: NUS

Esplanade And Marina Bay From High Up
SINGAPORE – A latest research done by the National University of Singapore (NUS) has found that the category of housing possessed by Singaporean parents, together with the nation’s housing policies, can significantly affect the next generation’s economic standing. Reference to the study, kids from low-income families, defined as those whose parents are in the lowest 60th percentile nationally, display a climb in housing wealth, predominantly due to Singapore schools being situated close to HDB towns.On the contrary, children from middle-income families with parents between the 60th and 80th percentile positions, are worse off than their parents in housing category, due to government subsidies motivating them to purchase more affordable public housing. Unless of course they upgrade to a private residence like Penrose, or for those staying in the North to upgrade to The Watergardens @ Canberra condo.

In the meantime, kids birthed to the top 20th percentile of families, stay nearest to their parents’ wealthy levels, however are nonetheless no better off in absolute rank, partially because there is little room for them to do better than their parents.

With regards of methodology, the research group combined data from administrative records and housing transaction between 1995 and 2018, and narrowed down specifically on kids born between 1965 and 1984 (54 to 35 years old). To inspect closely the influence of public policy on inter-generational wealth mobility, the information was then mapped against large-scale programmes, like the Build-to-Order (BTO) and Married Child Priority Schemes (MCPS) in public housing.

The study also reflected that inter-generational housing wealth mobility differs across the many areas in Singapore, due to neighbourhood characteristics and local policies.

For example, upward movements are focused in new towns like Pasir Ris, Punggol and Jurong West where government policies have furthered good public housing with subsidies. On top of that, the MCPS, which provides more subsidies to encourage children to live close to their parents, has enabled them to rise up the housing wealth ladder, the researchers pointed out.

Higher mobility is also obvious for children growing up in public housing, and when there are lesser restrictions for the BTO scheme. This is because public housing, specifically for first-time buyers, is heavily subsidised by the government, and gives new homeowners a head start, the study noted.

Interestingly, the researchers are in the opinion that the high-quality education found in public schools is a key factor that affects Singaporeans to have 1 of the highest level of mobility within lower-tiered households, in comparison to other countries. Therefore by owning Penrose which is near good schools, one can give the economic foundation from which the kids can excel and move upwards in life.

“As such, Singaporean children from low-income families gain so long as there are public schools around their neighbourhood, while children from middle-income families staying in new towns may be unable to locate a place in high-quality public education institutions, stopping them from keeping up with their parents’ wealth,” the study pointed out.

Kids from the upper-income families normally stay in the same core central areas as their parents, and therefore their mobility is largely stagnant.

The study was co-authored by Qian Wenlan and Sumit Agarwal from the NUS Business School Department of Finance; in cooperation with Sing Tien Foo, dean’s chair and director of Institute of Real Estate and Urban Studies (IRES); as well as Yi Fan from the NUS School of Design and Environment.

Mentioned Prof Agarwal: “Housing wealth is the biggest component of Singaporean’s overall wealth, therefore understanding inter-generational wealth mobility is critical to anticipating how younger Singaporeans will perform in the future. Penrose condo is a good addition to that wealth.

“Inter-generational wealth mobility is enabled by favourable public policies. In the long run, it is probable to stabilise as Singaporeans marry across socio-economic classes,” he added.

Source: https://www.straitstimes.com/business/property/type-of-housing-singaporean-parents-own-can-impact-childrens-future-economic

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