In a recent interview with the Straits Times, Minister for National Development Mr. Mah Bow Tan claims that housing prices have not ‘moved faster than household incomes’ in the past decade, contrary to popular opinion.
To corroborate his assertion, a chart of figures from the Department of Statistics and the Housing Development Board was whipped up. The chart of figures basically maps the HDB resale flat index and the median household income levels over the past 10 years, with 1999 as the base year.
According to the chart, housing prices have not moved faster than the median household incomes.
“So, when people say prices have moved faster than incomes, it’s not true… Realistically, in the last 10 years, prices have moved in tandem with income — except the last year,” Mr. Mah said.
However, a netizen has pointed out that the choice of base year can be very significant.
Hazel Poa, who had worked in — and left, the civil service after graduating from Cambridge University, showed why.
This is the original chart which was published in the report, citing 1999 as the base year. According to this chart, the HDB Resale Price Index (RPI) did not outstrip the Median Household Income (MHI).
Save for brief periods from 2000-2001 and 2004- 2005 where the HDB Resale Price Index decreases and the Median Household Income increases, the RPI has been nudging closer and closer to the MHI, especially since 2006.
As we can see from the graph, the rate of growth for the HDB resale index rose exponentially since 2006 in comparison with the growth of median household income. The difference between the two curve decreases at an increasing rate to the point whereby 2008 the RPI clearly outstrips the MHI.
We can see the Median Household Income faltering for twos years between 2001- 2003 and experiencing sluggish growth over the next few years till 2006-2007. Thereafter, the Median Household Income experiences a relatively steep drop in a year in comparison to its growth cycles in the past 6-7 years.
The Resale Price Index, on the other hand, grew at an increasing rate from 2006 – 2009, and detracts itself almost completely from the trajectory of the Median Household Income from 2006 on.
The HDB Resale Price Index has been on steady upward surge from 2006 – 2009, and the slight decrease in its gradient outweighs to a large degree the fall in Median Household Income.
The gap between the HDB Resale Price Index and the Median Household Income is the most striking from 2008 – 2009.
All these data clearly contradicts Mr. Mah’s claim that the rise of HDB Resale Price Index did not outstrip the increase in Median Household Income.
Angry Netizens demand for Answers
One of Singapore’s most popular online alternative news website, The Online Citizen, ran a feature on it that attracted a number of strong responses.
Some demanded to know why 1999 was chosen as a base year — at the aftermath of the 1998 Asian Economic Crisis, when many suffered pay cuts and job losses. Housing prices, they pointed out, will face a delay in adjustment of their prices. Of all the possible years from 2000 on, only choosing 1999 as the base year would corroborate Mr. Mah’s claims. If the base year was chosen earlier on, such as 1995, the graph would look a lot worse.
Other asked if journalist Jessica Cheam, who covered the report and recently won the Young Journalist award, might be interested in publishing what would happen if the base year for the graph, upon which the entire report hinges on, is changed.
This incident threw doubts into the minds of many netizens of how statistics are used to corroborate certain factual assertions, since tacit premises of these statistics can easily be manipulated to support any sort of truth claims.
The average Singaporean is surely not likely to be discerning enough to spot what a big difference in the graph would make if the base year was changed by just a single year. Most would certainly have taken it as an indubitable truth.
Thanks to the discerning eye of Ms. Poa and the local netizen community, some Singaporeans now know otherwise.