Lifetime Income and Housing Affordability in Singapore
AbstractMost commonly used measures of housing affordability are essentially short-run indicators that compare current income with house prices or housing costs. Despite the emphasis in the literature on the importance of long-term affordability, researchers have not developed measures of lifetime income because of data constraints. Many developed countries publish annually household income by age of household heads. Using these data for Singapore, the paper presents a methodology to compute lifetime income from predicted annual household earnings over the working life for each birth cohort in the dataset. The lifetime income of Singapore households by three income quantiles sheds new light on widening income gaps. The affordability index, defined as the ratio of lifetime income to house price, reveals informative trends and cycles in housing affordability in both the public and the private sectors. The paper argues that residential property price escalations need to be avoided.
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Bibliographic InfoArticle provided by Urban Studies Journal Limited in its journal Urban Studies.
Volume (Year): 48 (2011)
Issue (Month): 9 (July)
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Web page: http://www.gla.ac.uk/departments/urbanstudiesjournal
Other versions of this item:
- Tilak Abeysinghe & Jiaying Gu, 2008. "Lifetime Income and Housing Affordability in Singapore," Microeconomics Working Papers 22558, East Asian Bureau of Economic Research.
- Tilak Abeysinghe & Jiaying Gu, 2008. "Lifetime Income and Housing Affordability in Singapore," SCAPE Policy Research Working Paper Series 0807, National University of Singapore, Department of Economics, SCAPE.
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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