Singapore, 17 October 2019 – A study by the National University of Singapore (NUS) has shown the significant influence the type of housing Singaporean parents own has on their children’s future economic status.

According to the study, children from low-income families showed upward mobility in intergenerational housing wealth, in large part due to the proximity of public housing to Singapore’s generally strong public education system.

However, children from middle-income families appeared to be worse off than their parents, primarily because government subsidies motivate them to buy into more affordable public housing.

The study also found that children from upper-income families retained the same position in terms of housing wealth as their parents, but only rarely overtook them.

The study was co-authored by Low Tuck Kwong Distinguished Professor Sumit Agarwal and Associate Professor Qian Wenlan from the Department of Finance at NUS Business School, together with Associate Professor Sing Tien Foo, Dean’s Chair and Director of Institute of Real Estate and Urban Studies (IRES) and Assistant Professor Yi Fan from NUS School of Design and Environment.

 

Methodology

The research team combined data from housing transaction and administrative records between 1995 and 2018, and focused specifically on children born between 1965 and 1984.

To examine the impact of public policy on intergenerational wealth mobility, the data was then mapped against large-scale programmes, such as the Build-to-Order (BTO) and Married Child Priority Schemes in public housing.

 

Findings

The study found that children from low-income families, defined as having parents in the bottom 60th percentile nationally, show upward mobility in housing wealth. In contrast, children from middle-income families with parents in the 60th to 80th percentile ranks are worse off than their parents in housing type in large part due to them capitalising on government housing subsidies. Meanwhile, children born to the wealthiest top 20th percentile of families keep closest to their parents’ wealth levels, but are nevertheless worse off in absolute rank partly because there is less room for them to surpass their parents.

Intergenerational housing wealth mobility also differs across different regions of Singapore due to local policies and neighbourhood characteristics. Upward movements are concentrated in new towns such as Punggol, Pasir Ris and Jurong West where government policies have promoted quality public housing with subsidies. In addition, the Married Children Priority Scheme, which provides additional subsidies to encourage children to live near their parents, has enabled them to climb up the housing wealth ladder.

Higher mobility is also evident for children growing up in public housing, as well as when there are fewer restrictions for the BTO scheme. This is because public housing, especially for first-time buyers, is heavily subsidised by the government and provides a head start for new homeowners.

The researchers believe that the high-quality of public schools in Singapore is one of the factors that influences Singapore having one of the highest level of mobility among lower-tiered households compared to other countries. Therefore, Singaporean children from low-income families benefit as long as there are public schools in their neighbourhood, whilst children from middle-income families living in new towns may not be able to find a place in high-quality public education institutions, preventing them from keeping pace with their parents’ wealth.

Children from the upper-income families generally remain in the same core central areas as their parents and thus their mobility is largely flat.

Prof Agarwal said, “Housing wealth is the largest component of Singaporean’s overall wealth, so understanding intergenerational wealth mobility is key to predicting how younger Singaporeans will fare in the future.”

“Intergenerational wealth mobility is enabled by favourable public policies.  In the longer term, it is likely to stabilise as citizens marry across socioeconomic classes,” he added.

 

For media enquiries, please contact:

Jack LOO
Manager, Corporate Communications
NUS Business School
National University of Singapore
DID: +65 6516 5556
Email: jack.loo@nus.edu.sg

 

About National University of Singapore (NUS)

The National University of Singapore (NUS) is Singapore’s flagship university, which offers a global approach to education, research and entrepreneurship, with a focus on Asian perspectives and expertise. We have 17 faculties across three campuses in Singapore, as well as 12 NUS Overseas Colleges across the world. Close to 40,000 students from 100 countries enrich our vibrant and diverse campus community.

Our multidisciplinary and real-world approach to education, research and entrepreneurship enables us to work closely with industry, governments and academia to address crucial and complex issues relevant to Asia and the world. Researchers in our faculties, 29 university-level research institutes, research centres of excellence and corporate labs focus on themes that include energy, environmental and urban sustainability; treatment and prevention of diseases common among Asians; active ageing; advanced materials; as well as risk management and resilience of financial systems. Our latest research focus is on the use of data science, operations research and cybersecurity to support Singapore’s Smart Nation initiative.

For more information on NUS, please visit www.nus.edu.sg.

 

About NUS Business School

The National University of Singapore (NUS) Business School is known for providing management thought leadership from an Asian perspective, enabling its students and corporate partners to leverage global knowledge and Asian insights.

The school has consistently received top rankings in the Asia-Pacific region by independent publications and agencies, such as The Financial Times, Economist Intelligence Unit, and QS Top MBA, in recognition of the quality of its programmes, faculty research and graduates.

The school is accredited by AACSB International (Association to Advance Collegiate Schools of Business) and EQUIS (European Quality Improvement System), endorsements that the school has met the highest standards for business education. The school is also a member of the GMA (Graduate Management Admission) Council, Executive MBA Council, Partnership in Management (PIM) and CEMS (Community of European Management Schools).

For more information, please visit bschool.nus.edu.sg, or go to the Think Business portal, which showcases the School’s research.


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