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Lifetime Income and Housing Affordability in Singapore

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  • Tilak Abeysinghe
  • Jiaying Gu

Abstract

Most 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.

Suggested Citation

  • Tilak Abeysinghe & Jiaying Gu, 2011. "Lifetime Income and Housing Affordability in Singapore," Urban Studies, Urban Studies Journal Limited, vol. 48(9), pages 1875-1891, July.
    • Handle: RePEc:sae:urbstu:v:48:y:2011:i:9:p:1875-1891
    DOI: 10.1177/0042098010380956
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    2. Tilak Abeysinghe, 2019. "Old-age dependency: is it really increasing in aging populations?," Applied Economics Letters, Taylor & Francis Journals, vol. 26(13), pages 1111-1117, July.

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    More about this item

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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