Financial assets stand at almost S$1.8 trillion, rising 6.7 per cent year on year

The net worth of Singapore households continued to grow, though more slowly, in the first quarter of 2024 as housing values moderated from their surges in recent years.

Household net worth (assets less liabilities) rose 8 per cent year on year to just under S$2.9 trillion as at end-March, quarterly data from the Singapore Department of Statistics, released on May 28, showed. This was a tad slower than the previous quarter’s growth of 8.9 per cent to S$2.8 trillion.

Household net worth rose 7.8 per cent in Q3 2023 and 8.9 per cent in Q2, after steadily slowing from double-digit growth seen at end-2021. Total assets, which comprise financial and residential property assets, were 7.2 per cent higher at S$3.2 trillion in Q1 2024, slightly less than the 8 per cent increase in Q4.

The deceleration tracks a slowdown in housing markets which has capped home price growth. Private home prices were 4.9 per cent higher year on year in Q1, down from a 6.8 per cent rise in Q4 2023.

On a quarterly basis, prices rose 1.4 per cent in Q1, following a 2.8 per cent rise in the previous quarter and a 1 per cent rise in Q3 2023.

Public housing prices, meanwhile, rose 1.8 per cent in Q1, picking up slightly from a 1.1 per cent increase in Q4 and a 1.3 per cent rise in Q3. Year on year, public housing prices were up 5.8 per cent in Q1.

In the household balance sheet, residential property asset values were 7.9 per cent higher year on year at S$1.4 trillion in Q1 2024.

While still robust, growth in residential assets was down from 9 per cent in Q4 2023. Its peak in recent years was 13.5 per cent in Q4 2021.

Private housing assets rose by 9.3 per cent in Q1 2024 to S$814 billion, rising at a faster pace than public housing assets, which increased by 6.1 per cent to S$612 billion.

Financial assets, which include currencies and deposits, shares and securities, life insurance, Central Provident Fund savings and pension funds, stood at almost S$1.8 trillion at the end of Q1, 6.7 per cent up year on year. Most of the financial assets were up year on year, except pension funds, which fell 0.9 per cent in Q1.

The value of shares and securities held rose 10.5 per cent, possibly reflecting a rebound in major overseas stock markets such as in the United States, said Brian Lee, an economist with Maybank Investment Banking Group.

Meanwhile, household liabilities rose 1.7 per cent on a yearly basis to S$364.8 billion in Q1, slightly faster than the 1 per cent increase in Q4 2023.

These comprise mortgage loans and personal debt, such as car loans and credit card bills.

Still, Singapore household balance sheets were in good shape, said analysts.

Qian Wenlan, director of the Institute of Real Estate and Urban Studies at the National University of Singapore, said a 1.7 per cent year on year liability growth for Q1 is relatively modest compared to a recent peak of 7.4 per cent in Q4 2021.

Mortgage loans stood at S$269.3 billion in the first quarter of 2024, representing a 2.2 per cent growth. In Q4 2023, mortgage loans grew 2.3 per cent.

Debt was not rising at an alarming rate, said Alan Cheong, Savills’ executive director for research and consultancy.

Mortgage and HDB loans, “the two largest items on the liability side of the balance sheet”, contributed largely to debt, he said.

"These increases could be due to more units (being completed) in Q1 2024, resulting in the full draw-down of the loans."

More than 21,000 private residential homes were completed in 2023, data from the Urban Redevelopment Authority showed.

Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, expects that in 2024, private housing completions will slow down to fewer than 10,000 units.

She said: “We also expect a slowdown in prices, but not a decline. Hence, residential assets will still rise in value, but at a slower rate, perhaps in the range of about 6 to 7 per cent by end-2024.”

Personal loans rose by 0.4 per cent quarter on quarter to S$95.5 billion and crept up 0.2 per cent year on year, after four consecutive quarters of year-on-year declines. The increase could be due to more people taking out loans to renovate their homes, Cheong said.

CBRE’s Song said: “Given that assets grew 7.2 per cent and liabilities (grew only) 1.7 per cent, the overall net worth or equity position is in very good shape.”

Even as property values rise, lending curbs in the form of total debt servicing ratio measures have effectively “sterilised” new property purchases from being funded by excess home equity value, said Savills’ Cheong.

“However, if household cash, financial and security assets increase, this is liquidity, and could be channelled into the housing market,” he added.

Still, while many households have the financial capacity to buy, “many are choosing to wait for more favourable economic conditions before making a purchase,” said Lee Nai Jia, PropertyGuru Group’s head of real estate intelligence, data and software solutions.

CBRE’s Song said: “While property purchasing power is still dependent on household income, higher household net worth could mean that there are fewer concerns of a market crash, and thus a more sustainable property market. And unless there is a sharp economic downturn, the market should be stable to positive.”

As a percentage of total household assets, residential properties made up 44.3 per cent in Q1, a slightly larger share of the pie than in the previous quarter, when they accounted for 44 per cent of household assets.

Financial assets accounted for the remaining 55.7 per cent of household assets.

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Credit: The Business Times