Department of Economics

Faculty of Arts and Social Sciences


Singapore Centre for Applied and Policy Economics

Steering Committee
Working Papers
Newspaper Articles
Econometric Studies Unit
Housing Affordability in Singapore
Living Affordability in Singapore

Living Affordability in Singapore by Income Groups

The standard measure of cost of living is the consumer price inflation measured by changes in the Consumer Price Index (CPI). The CPI captures prices of a given basket of consumer goods and services. Consumer price inflation itself does not indicate whether living affordability has been improving or not. Affordability by definition requires an assessment of expenditure in relation to income. The often used indicators like real income or real wages are also not complete indicators of living affordability. A low income household, for example, may have to spend all its real income to sustain a certain relative standard of living. The most informative way to assess living affordability, therefore, is to examine the trends of household consumption expenditure relative to household income for different income groups and for different expenditure categories. A steady increase in the expenditure-income ratio (EIR) indicates deteriorating affordability. However, a steady drop in the EIR may not necessarily mean improving affordability. Income in this exercise refers to income from work.

Key findings

Overall resident household expenditure-income ratio has trended downward. This may not necessarily mean improving living affordability if households save more in anticipation of lumpy expenditures such as housing, healthcare and children’s education in a rising cost environment. They do so by cutting on flexible expenditures.

The lowest 30% of the income ladder show expenditures more than their incomes. This indicates that government transfers play a key role for these households.

Currently a median income household spends about 80% of its income on consumption and those in the 81st-90th income percentile spend about 40%.

Housing, health and transport stand out as rising expenditures relative to income. Housing EIRs have trended upward across all income groups and housing consumes the largest proportion of income. Health EIRs have remained remarkably below 6% for those above the bottom income decile.

Education expenditures of higher income groups have increased whereas that of the bottom 20% of the income ladder remained the same or declined. This needs further analysis.

Clothing and footwear spending seems to take a tumble during economic downturns.

Contrary to initial expectations, expenditure on recreation and culture has declined resulting in a sharp decline in the corresponding EIRs. This is consistent with saving in anticipation of large and lumpy expenditures.