Is Singapore Residential Real Estate in a bubble? (2022 / 2023)


UBS recently released a very interesting report – Global Real Estate Bubble Index 2022. 

The report provides interesting data on housing trends worldwide, and which cities are in a real estate bubble. 

Let’s take a look at the interesting findings!

This article was submitted by a Guest Contributor. The opinions expressed in this publication are those of the Guest Contributor.

Housing boom driven by low interest rates?

According to UBS’ real estate chief investment office, they note that the common narrative surrounding the property boom of the last decade usually points to housing supply and urbanization.

However, they observe that residential rents have only risen hand in hand with local wages over the same period.

Thus, they theorize that the main reason for the exorbitant increase in home prices is actually central banks.

Ultra-low financing conditions and demand outpacing construction have led to buoyant price expectations among buyers.

Ultra-low financing conditions and demand outpacing construction have led to buoyant price expectations among buyers.

However, this is changing. 

Interest rates have climbed in recent months to combat inflation. Coupled with turbulent financial markets, willingness to pay for owner-occupied homes is likely to take a hit.

Worldwide Housing Bubble Trends

According to the UBS’ report, these are some of the key findings:

  • Strong housing price growth
    • Nominal house price growth in the cities analyzed accelerated to 10% from mid-2021 to mid-2022, representing the highest increase since 2007.
    • Four US cities—Miami, Los Angeles, San Francisco, and Boston—are among the top five with the fastest-growing prices.


  • High imbalances in Canada and Europe
    • Imbalances are sky-high in both analyzed Canadian cities, with Toronto topping the index. Valuations in Frankfurt, Zurich, Munich, and Amsterdam also show elevated risks in Europe.


  • Property is getting less affordable 
    • Since last year, mortgage rates have almost doubled on average across the cities analyzed.
    • Alongside increased prices, this makes city housing much less affordable.
    • A skilled service sector worker can afford roughly one-third less housing space than before the pandemic.


  • Household leverage on the rise
    • In almost all cities, households have been leveraging up.
    • Outstanding mortgages recorded the strongest increase since 2008.
    • Debt-to-GDP is on the rise as well, reflecting the cheap financing conditions and weak economic growth since the pandemic.


  • Back to cities, and higher demand for rental 
    • People have returned to the cities.
    • Strong household formation and unaffordable owner-occupied housing drove demand for rental units. As a result, rents grew by 7% on average last year, making up all rental losses accumulated during the first year of pandemic.


  • Gloomy prospects
    • Higher interest rates, inflation, turmoil in the financial markets, and deteriorating economic conditions are putting the housing boom under pressure.
    • In a majority of cities with high valuations, price corrections have either already begun, or are expected to start in the coming quarters.


Higher interest rates, inflation, turmoil in the financial markets, and deteriorating economic conditions are putting the housing boom under pressure.


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Valuations at peak level

Nominal house price growth in the 25 cities analyzed accelerated to almost 10% on average from mid-2021 to mid-2022, the highest increase since 2007.

In fact, all but three cities—Paris, Hong Kong, and Stockholm—saw their house prices climb.

The highest regional price growth of more than 15% in nominal terms was recorded in the North American cities.

On top of this, an acceleration in the growth of outstanding mortgages was evident in virtually all cities, and for the second year in a row, household debt grew significantly faster than the long-term average.

The lending boom was conspicuously strong in the Middle East, the US, Canada, and Australia.

Housing prices in nonurban areas have increased faster than in cities for the second consecutive year.

Interestingly, price growth has slowed significantly in inflation-adjusted terms. House price growth was outpaced by consumer prices in 10 out of 25 markets analyzed.

Asia Pacific Trends

Hong Kong

According to the report, a 15-year secular boom once saw Hong Kong record the strongest price growth among all cities in the study.

However, this phase ended in mid-2019. Since then, the market has broadly stagnated as the lack of affordability, economic woes, and pandemic restrictions all took a major toll on demand.

Looking ahead, higher mortgage rates and a weakened economic outlook will likely lead to further property deflation. In the medium term, an eventual economic recovery in Mainland China could become a new tailwind.


Real estate prices in Tokyo have increased almost continuously for over two decades —including during the pandemic— bolstered by attractive financing conditions and population growth. During this period, imbalances have reached the bubble risk threshold from undervalued 20 years ago.

Indeed, the housing market in Tokyo has noticeably decoupled from the rest of the country as affordability continues to fall. But signs of weakening have emerged of late: price growth halved to 5% in year-over-year terms and lagged the nationwide average for the first time since a decade.


The housing market in Sydney has remained outside bubble risk territory since a cooldown in 2018 and 2019.

However, accommodative monetary policy and improved housing affordability once again ignited the market in subsequent years.

Prices surged altogether by more than 30% in 2020 and 2021 which sparked another increase in imbalances before the tightening of lending standards last year and before aggressive interest rate hikes sharply reduced affordability this year.

According to the Reserve Bank of Australia, interest rate hikes have reduced the maximum mortgage loan amount that a household can obtain by a fifth. Consequently, prices have already dropped by more than 5% during the second quarter of 2022.

Singapore Residential Real Estate 

According to the UBS report, housing market imbalances in Singapore began rising in 2018 as strong foreign demand supported price growth.

Between mid-2021 and mid-2022, house prices in Singapore added another 11% to their gains.

However, the market remains in only slightly overvalued territory as high rental demand has prevented a larger increase in imbalances.

According to the report, residential house prices in Singapore increased by almost 11% in nominal terms between mid-2021 and mid-2022, representing the strongest growth rate in more than a decade.

However, rental price growth has accelerated even more, leaving mid-2022 rents 16% above their mid-2021 levels.

Following construction delays, pent-up demand for housing space from the pandemic and strong expat interest are driving prices up.

Singapore’s housing market remains in slightly overvalued territory, virtually unchanged from last year.

The government has introduced several cooling measures in the last few months.

These include higher stamp duties on secondary and subsequent residential properties and tighter lending standards for private and public properties. Also, the government has announced efforts to increase the supply of housing to meet strong demand.

Singapore benefits from its long-standing position as a strong business hub and a safe haven for wealthy investors.

However, following construction delays, three times more units should be completed in 2022 and 2023 than in the previous two years.

Moreover, rising mortgage rates will have a dampening impact on demand. As a consequence, UBS expects market sentiment to weaken.

But, given the lack of housing speculation and continued foreign demand growth, a price correction in nominal terms is unlikely in the short run.

Unaffordable Housing?

According to the report, buying a 60 square meter (650 square foot) apartment exceeds the budget of those who earn the average annual income in the skilled service sector in most world cities.

In Hong Kong, even those who earn twice that income would struggle to afford an apartment of that size.

House prices have also decoupled from local incomes in Paris, Tokyo, London, and Tel Aviv, where price-to-income multiples exceed 10 by far.

Unaffordable housing is often a sign of strong foreign investment demand, tight zoning, and strict rental market regulations.

By contrast, housing is relatively affordable in Miami, Madrid, Dubai, San Francisco, and Boston.

Given relatively high incomes, purchasing a 60 square meter apartment is also relatively feasible for residents of Los Angeles, Milan, Geneva, or Zurich.

Of course, for home buyers, affordability also depends on mortgage rates and amortization obligations.

Munich, Hong Kong, and Tel Aviv have the highest price-to-rent ratios, followed by Frankfurt, Geneva, and Zurich.

Extremely high multiples indicate an excessive dependence of housing prices on low interest rates.

Conversely, rental laws in France, Germany, and Sweden are strongly pro-tenant, preventing rentals from reflecting true market levels.

Check out the full report for more interesting insights into housing trends worldwide!


Do you think Singapore is in a real estate bubble? Share your thoughts in the comments below!


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  1. Spore residential market is bubble foreigners. But if there’s a huge exodus, which is not unlikely, it will come down quite significantly. This view is of course a contrarian one as opposed to what property agents and analysts are touting. The future is always unpredictable which the Chinese say it well, “计划永远赶不上变化”.


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