Singapore: a bubble risk, but with moderation

In the last five years, rent growth surpassed price growth in Singapore’s private housing market, as rents climbed by 28%, while prices increased by 18% in real terms. This phenomenon was partly attributed to an influx of global talent driving up rental demand following the pandemic, with new supply hampered by pandemic-induced construction delays.

“Last year saw an inflection point. Rents declined by almost 7% in real terms, while prices crept higher by 3%.”

Even as the price-to-rent ratio increased, the price-to-income ratio suggests affordability has improved as income growth outpaces price increases.

Overall, the risk of a housing bubble has increased somewhat over the last four quarters but is only moderate, the UBS Global Real Estate Bubble Index reveals.

Where do we go from here?

Back in 2011, foreign buyers accounted for almost a quarter of total real estate transactions. Their impact on the luxury market was particularly strong. Nowadays, the share of foreign purchases has fallen to a single digit.

This is mostly due to the recent doubling in stamp duty for foreigners. Persistently high interest rates are putting a further brake on real estate prices, as is the easing of previous bottlenecks in supply.

These factors make Singapore one of 11 cities out of the 25 covered in our Global Real Estate Bubble Index to be in moderate bubble territory.

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