News: Children’s future economic status influenced by type of housing parents own

Oct 18, 2019

Findings from the research showed that children from lower-income families enjoy greater mobility in housing wealth, while children from middle-income families tend to face downward mobility in housing wealth. 

A recent research by the National University of Singapore (NUS) revealed that the type of housing owned by Singaporean parents, coupled with the country’s housing policies, can heavily influence the next generation’s economic status, reported The Business Times.

The research combined data gathered from housing transaction and administration records from 1995 to 2018, and focused on children born from 1965 to 1984.

The data was then mapped against large-scale programmes related to public housing, such as the Married Child Priority Schemes (MCPS) and Build-to-Order (BTO), to examine the effect of public policy on inter-generational wealth mobility.

The research indicates children belonging to low-income families, defined as those whose parents belong to the bottom 60th percentile nationally, show upward mobility in housing wealth, mostly because most schools are located near HDB towns.

On the other hand, children belonging to middle-income families whose parents are in the 60th to 80th percentile ranks, fare worse than their parents in housing type, due to government subsidies motivating them to buy into less expensive public housing.

Meanwhile, children belonging to high-income families, or the richest top 20th percentile of families, keep closest to their parents’ levels of wealth, but are still worse off in absolute rank, partly because there is less room for them to get ahead of their parents.

The research also revealed that inter-generational housing wealth mobility varies across Singapore’s regions, due to neighbourhood characteristics and local policies.

As an example, upward movements are concentrated in newer towns such as Jurong West, Pasir Ris and Punggol, where quality public housing with subsidies have been promoted by government policies.

Higher mobility is also apparent for children growing up in public housing and when there are fewer restrictions for the BTO scheme.

The reason for this is public housing is heavily subsidised by the government, and gives a head start for new homeowners.

The researchers also believe that the high quality of Singapore’s public schools is a big reason why the country possesses one of the highest mobility levels among lower-ranked households, as 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,” the research noted.

Children belonging to the upper-income families mostly remain in the same core central areas as their parents, and therefore their mobility is mostly flat.

Home buyers looking for Singapore Properties may like to visit our ListingsProject Reviews and Guides.  Also read more about the hottest areas to live in with PropertyGuru’s AreaInsider

 

Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

 

 

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