According to Standard Chartered, Singapore’s households have loans averaging 151% of annual income, second only to Malaysia’s in South-East Asia.
Housing debt in particular has soared, rising by 18% a year over the past three years; home loans as a share of GDP have jumped from 35% to 46% over the same period. According to figures released this week by Credit Bureau Singapore, the number of borrowers with at least two mortgages as well as other loans has risen by 78%, to 48,782, since 2008. In a population of just 5m, these numbers count.
Rock-bottom interest rates are the reason why people are taking on debt as never before. Such behaviour is rational enough but many worry about the systemic consequences of a swift build-up of debt. The local housing market, which accounts for most of the loans, looks overheated. Despite seven rounds of “cooling” measures by the authorities to try to slow the relentless spiral of property prices, demand remains strong as people just borrow more to buy their dream condo or government-built flat.