Chart of the Day: Why is domestic consumption on a downward slide?

Property is the biggest drag on expenditure.

A consumption conundrum is happening in Singapore: Households are sitting on a massive cash pile, but private consumption as a percentage of GDP is still among the lowest in the world. According to analysts, a key reason behind this paradox is Singapore's intense infatuation with residential property as an investment class, with housing-related expenditure eating up almost a third of household budgets across the city-state.

"Old habits die hard, apparently. Singaporeans have been trained too well
by their own government to see property as the only safe source of longterm value creation. But as owning a property is expensive in Singapore, most people would put aside money for the day they can afford to buy one. Or if they have enough, they are stashing it somewhere for the right time to invest in properties," a report by Maybank Kim Eng noted.

Apart from the penchant for property, households are also grappling with a steep rise in liabilities, which has weighed down consumption appetite and impacted disposable income.

“The implication is that people are hoarding their hard-earned dollars and not spending. Even as their per-capita income has increased to the seventh-highest in the world, Singaporeans have not generously opened up their wallets,” said the report.