Annual Level of Household Net Wealth and Savings in Last Five Years

Mr Liang Eng Hwa asked the Prime Minister (a) in the last five years, what is the annual level of household net wealth and savings respectively; (b) what are the factors contributing to the changes; (c) what proportion of the household net wealth is held in domestic real estate; and (d) whether the COVID-19 pandemic has impacted the households’ propensity to save.

Household net wealth is estimated to have increased by 34% between Q4 2017 and Q3 2021 (latest data available). While both household assets and liabilities have grown, assets have grown faster than liabilities.

The increase in household assets has been driven by both residential property assets and financial assets. Some 42% of household assets as at Q3 2021 are held in residential assets and the remaining 58% in financial assets.

Household liabilities are mainly accounted for by mortgage loans. Mortgage loans have picked up amid the buoyant property market, increasing by almost 5% in the last year. The latest property cooling measures, which included a tightening of the total debt servicing ratio threshold (TDSR), should encourage financial prudence.

Annual personal1 saving increased by 58% from $67 billion in 2017 to $106 billion in 2020. Two factors have been important. First, wages have risen steadily over the years, increasing the disposable income available to households. Second, as our population is maturing and actively saving for retirement, private consumption has grown at a slower pace than the growth in incomes. The personal saving rate has hence increased to 29% in 2019 from 22% in 2011, contributing to the overall increase in annual personal savings.

In 2020, personal savings picked up sharply, reflecting a decline in consumption amid heightened economic uncertainty. Households’ opportunities to spend were also constrained by travel and safe distancing restrictions. At the same time, government fiscal measures that preserved employment such as our Jobs Support Scheme and direct transfers to households such as Care and Support cash payments, ensured that personal disposable income still grew by 1.3% despite the severe economic downturn. As private consumption declined by 15%, the personal saving rate rose to a historic high of 41% last year.

The personal saving rate has started to ease, coming down to 36% by Q3 2021. With the economic recovery underway and confidence returning, households have begun spending more. However, given lingering uncertainty associated with the ongoing COVID-19 pandemic, it will take some time for saving rates to get back to pre-pandemic levels of below 30%. Over the longer term, however, the ageing of the population will be the larger driver of trends in household saving.