(01-07-2013, 06:59 AM)yeokiwi Wrote: Quote:Total Singapore household debt to GDP stands at 279% in the 1st quarter of 2013 and most of it are in mortgages.
Looking at the loan side of the story is incomplete without looking at the current asset.
It may look inconceivable but the loan-to-asset ratio of Singaporeans is really good.
Hi yeokiwi,
Thanks! This loan-to-asset ratio of Singapore household is a good number to provide a strong counter-argument why the Singaporean household is not in dire trouble when the property bubble bursts.
I am not yet totally convinced. If this number is the current ratio of a company, it is good. However, total household loan-to-asset ratio consists of the debt and assets from all the households. Given today's extremely unbalanced wealthy distribution, this figure can be skewed by the ultra-rich who owes little debt and plenty of assets. Does it reflect the typical household?
A more useful number will be the percentage of Singaporean households with current ratio less than 1 to negate the skewing effect of ultra-rich households. Unfortunately, I am not sure if such a number exists. There are many people on this forum who are rich enough to skew this statistic the total loan-to-asset ratio
Please get rid of their distorting influence.
There is a household sector balance sheet in another valuebuddies thread .
http://www.valuebuddies.com/thread-1954-page-2.html
A few things observed from the balance sheet;
- Up to 2003, most mortgage debt fell into the hands of HDB. After HDB "outsourced" the financing, most mortgage debt went to the banks. The social consequences will be much more serious when the property market crashes next time compared to 1997 because the debt now is mostly held by profit-driven banks who will not hesitate to foreclose.
- Proportion of shares/securities held by households do not look high and cash deposits look healthily high. This means that the stock market still has much room to grow given the amount of cash sitting on the sideline. This bodes well for the stock market and should be good news for most forummers here.
(29-06-2013, 11:52 AM)opmi Wrote: Yes. Those around me with 2 properties mainly civil servants especially both husband/wife teachers. And they are fresh meat never see property downcycle yet.
Hi opmi,
Thanks for the information. It is not surprising to know many civil servants own 2 properties. Civil servants have a fairly iron rice bowl compared to people from the private sector. For the more senior ones, the iron rice bowl can also be gold-plated. For this group of people, it makes good financial sense to employ leverage because of their stable and strong cashflow. It is like utilities and telecom operators having poor current ratio (yet not considered financially risky) because of their strong and stable cashflow.
Those who work in sectors(say, the electronics sector with shrinking exports for the past years) which see retrenchment on a regular basis will have to steer clear of leverage. Because of their unstable cashflow, it is risky for this group of people to buy a second property even if their salary is above-average. Companies with unstable cashflow usually have a higher current ratio to protect against bad times as it strikes them more often.