WHY DOES THE PERCEPTION OF THE SILVER HOUSING BONUS SCHEME DIFFER AMONGST THE ELDERLY?

Abstract

The liberalisation of the CPF in the 1980s has allowed Singapore to enjoy continuous years of high homeownership rates. Amongst typical homeowners, housing accounts for over 75.0% of retirement wealth and this has created a class of asset-rich and cash-poor elderly households. As the population in Singapore ages rapidly, elderly homeowners without adequate support and savings could consider the monetising option of downsizing their flats to release the substantial equity accumulated in their housing. Along this line, the Silver Housing Bonus Scheme (SHBS) is the most recent government measure aimed at broadening the menu of options to enable elderly households to finance their retirement. The extant literature indicates varying findings on whether the elderly are consuming their housing wealth. It appears that only in limited cases do the elderly decumulate housing equity by downsizing. Furthermore, the studies in Singapore suggest that the reasons motivating the elderly to move are different from those mentioned in the majority of research carried out in western countries. This dissertation therefore aims to investigate whether factors such as bequest motive, housing type and location affect the downsizing decision of elderly households. In this connection, a survey among 112 respondents who are elderly living in 1 to 5-room HDB flats in Jurong West or Toa Payoh was conducted to gauge their receptiveness to the SHBS. The majority of respondents, constituting 65.2% of the sample size, indicate their unwillingness to downsize their current residence. Chi-Square Tests suggest that neither flat type nor location bears a statistically significant association with unwillingness to downsize. However, a statistically significant relationship between bequest motive and unwillingness to decumulate housing wealth is detected. An Ordinal Probit Regression to include all three predictors also corroborates the findings from the Chi-Square Tests. Given the survey’s findings of a general lack of receptiveness among the elderly to monetise their housing asset, the dissertation also embarks on a discussion of other policy measures related to the letting of underutilized rooms or entire flat to assist the elderly in securing a steady rental stream to finance their retirement and at the same time to fulfill their bequest motive.