News: Singapore housing market remains in fair-valued zone

Oct 9, 2019

According to the UBS Global Real Estate Bubble Index score, Singapore properties remain “fair-valued” after last year’s cooling measures, which has helped to curb speculative demand.

Singapore’s housing market retains its position in the fair-valued zone despite government regulations reining in the growth of property prices, reported Singapore Business Review citing the latest UBS Global Real Estate Bubble Index.

With a score of 0.45, Singapore ranked 20th out of the 24 countries studied and was cited as the country with the most improved housing market with regard to affordability. Munich, Germany and Toronto, Canada placed first and second respectively.

UBS Global Real Estate Bubble Index 2019

 

“The Singapore housing market is one of the few amongst those we cover in which private housing affordability has improved in the last 10 years. Current prices are similar to those in 2008 whilst household incomes have climbed by 20 percent,” said UBS.

“Nonetheless, affordability is still stretched. It takes 12 annual incomes to buy a 60 sq m (650 sq ft) apartment on the private market.”

The report also noted that there is a bit of a decline in the market.

“The brief housing boom between mid-2017 and mid-2018 is over. Prices have stagnated since and the number of transactions fell,” it clarified.

UBS said that the Lion City’s market slowdown was primarily due to declining population, government regulation and an anticipated economic downturn in the near-term.

“The government is keeping the market on a leash. The additional buyer stamp duties (ABSD) for developers and purchasers of investment properties introduced last year have put a lid on the price upside and curbed speculative demand,” the report read.

“Population growth has also declined notably in the past two years. Finally, economic momentum is expected to deteriorate, limiting the willingness to pay.”

Additionally, UBS explained there was a limited risk of a price correction due to sound marketing fundamentals such as a healthy employment rate, good affordability and a decreasing vacancy rate.

 

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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