Overall, Singapore property prices have been on the uptrend for the past 8 years since March 2016.  This trend is likely to continue .

On the supply side, private condo units that TOP in 2024 are mostly pre-covid developments in 2019 where land sales supply are still
normalised.  Once we hit the covid years between 2020 to 2022, the land supply is drastically reduced.  This means that we will have period of drought in terms of new condo supply from 2025 to 2027.

On the demand side, our population increase has by 470k people from the covid low of 5.45million people in 2021 to 5.92million in
2023.  This huge increase in population, mainly due to the return of workers that left during covid, has push up rental
prices and house prices to all-time highs. Rental prices jumped 30% in 2022 and 10% in 2023.

Chart: Singapore Property price index from SRX

Is Singapore property market in a price bubble?

While we are at the all-time high for property price, this itself is not a conclusive indicator that we are in a bubble territory.  While all bubbles will reach an all-time high, not all all-time-high price equals to a bubble.

Property prices in Singapore are supported by high income and is sustainable.  The price to income ratio is a standard measure of housing affordability, this is similar to the price-to-earnings ratio in the stock market. Price to income ratio measures how many years of household income it takes to buy a house.  In 2024, Singapore’s ratio is 15, while the ratio is 20 for Taiwan and South Korea, and 30 for Hongkong and China.

UBS bank also does a global real estate bubble index every year.  In 2023, Singapore was classified as fair-valued as compared to other regions.

Source: UBS Bank (2023)

The other question to ask is:  Is our property market inflated through debts and borrowings?  If a country household is highly indebted and the debts are used to buy up property, this might be a sign that we are in bubble territory. Looking at Singapore, we quickly realised that our household debt to GDP is low among other countries.  At a household debt to GDP ratio of 46%, Singapore is lower than USA’s 75% and Switzerland’s 126%, which happens to have the highest debt to GDP ratio in the world. With Singapore implementation of the total debt service ratio, Singapore property market is likely not inflated through excessive borrowings going into the future as well.

In conclusion, the downside for property price is limited.  Given the low household debt, low price to income ratio and limited supply of private properties coming on stream in the coming three years.  2024 is likely to see property prices stabilise.  Thereafter, from 2025 the market is likely to experience a 3 year supply crunch.   And prices are expected to move upwards.

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