Living in the World's Most Expensive City: A Blessing or a Curse?

As a proud first-generation Singaporean, I’ve always taken pride in my clean and efficient homeground. However, it’s becoming increasingly clear that living in Singapore is getting more expensive by the day.

Singapore: The World’s Most Expensive City and Its Growing Divide

In recent years, Singapore has consistently ranked as the most expensive city globally. This isn’t just a title—it reflects the everyday reality for many of us, who are grappling with skyrocketing living costs and a growing income gap.

Let’s look at the numbers. For instance, in the first quarter of 2024, the median price for private residential property in Singapore soared to approximately SGD 2,000 per square foot. That’s a staggering 25% increase from SGD 1,600 just five years ago. Similarly, rental costs have surged. The average monthly rent for a three-bedroom apartment in the Central Business District now stands at SGD 6,500, up from SGD 5,200 five years ago.

Food and transportation have also seen significant price hikes. Dining out at a mid-range restaurant costs about SGD 30 per person today, compared to SGD 25 five years ago. Car ownership costs have doubled over the same period. Even public transport, while still relatively efficient, has become pricier; a monthly pass now costs SGD 150, up from SGD 130 five years ago.

Why Are Costs Going Up?

The rise in living costs is not unique to Singapore; many developed and developing countries face similar challenges. However, Singapore’s situation is aggravated by specific local factors, including but not limited to the following:

1. Susceptibility to Supply Chain Issues and Rising Material Costs: Singapore’s heavy reliance on imported goods means that global supply chain disruptions and rising material costs hit us harder. As a result, everything from construction materials to everyday products has become more expensive.
2. Market Dynamics: Singapore’s appeal as a desirable place to live and work has driven up demand for residential properties. With limited land and high population density, the supply of housing is constrained, leading to higher prices. Although the government has introduced cooling measures like increased stamp duties, the market remains robust, keeping prices high.
3. Taxes and Charges: While Singapore’s tax regime is generally attractive, the Goods and Services Tax (GST) has gradually increased from 7% to 9% over the past decade. This increase affects both businesses and consumers. Additionally, the Certificate of Entitlement (COE) for car ownership has doubled, further driving up living costs for many households.

Income Disparities and Relative Poverty

Despite the soaring costs, income growth hasn’t kept pace. According to the Ministry of Manpower, the median monthly gross income for full-time employed residents in 2024 is SGD 5,500, a modest 3% increase from 2020. This hasn’t been enough to keep up with rising living costs, widening the income gap.

A?recent study by the Institute of Policy Studies showed that people between the ages 21 and 34 are less likely to have seen their social status rise than those who are older.

While income inequality is said to have declined over time, which is attributable to the redistributive effect of the taxes through subsidies and vouchers given to lower income groups, the difference in income between the top and bottom 10% could be a gapping 10x or more - The bottom 10% of households earned $2,336 monthly, while the top 10% earned $32,901 monthly (based on an online source not independently verified by the author of this article)

Societal Implications

The soaring cost of living and increasing income disparity are reshaping Singaporean society. High living costs place a significant burden on lower and middle-income families, raising concerns about social mobility and economic inclusivity. Younger generations are finding it increasingly difficult to buy homes, which affects their ability to build wealth and achieve financial stability.

For many, especially those not in the top income brackets or the newly wealthy immigrants, the high cost of living is prompting consideration of relocation. Some are looking to neighboring countries like Thailand or Indonesia for more affordable living options.

The government is aware of these issues and has introduced measures like the Progressive Wage Model to boost wages for low-income workers and various housing grants for first-time homebuyers. However, balancing economic growth with affordability remains a challenging task.

Concluding Thought

Singapore’s position as the world’s most expensive city highlights a broader issue: rising living costs are outpacing income growth. The growing income gap and relative poverty underscore the need for continued policy innovation to ensure that Singapore’s prosperity benefits everyone. But it does not mean that policy innovation alone could solve all the problems. Social innovations from the ground-up play a crucial role to supplement top-down policies in addressing societal implications. Last but not least, self-help is the best help. It is time for everyone to wake up to the new reality and accept the changes and adapt accordingly.

References:

1. According to the 2024 Economist Intelligence Unit (EIU) survey, which benchmarks the cost of living in major cities worldwide, Singapore has once again claimed the top spot, surpassing other high-cost cities like New York, Hong Kong, and Paris. The EIU publishes an annual Cost of Living Index that ranks cities worldwide based on their living costs. The latest report can be accessed through the EIU's official website or their published reports: https://www.eiu.com/n/campaigns/cost-of-living/
2. Various real estate agencies and property analysts provide regular updates on housing prices and rental costs. Examples include reports from URA (Urban Redevelopment Authority) (https://www.ura.gov.sg/ ) or property websites like PropertyGuru (https://www.propertyguru.com.sg/property-news )
3. LTA Statistics: https://www.lta.gov.sg/content/ltagov/en/who_we_are/statistics_and_publications/statistics.html
4. Ministry of Manpower statistics website: https://stats.mom.gov.sg/Pages/homepage.aspx
5. https://www.todayonline.com/singapore/youth-social-status-ips-study-2089046
6. https://www.channelnewsasia.com/singapore/inequality-cna-explains-gini-coefficient-4132316#:~:text=In%202023%2C%20Singapore's%20Gini%20coefficient,on%20key%20household%20income%20trends .

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