Where does Singapore Property Prices stand in 2021?
Singapore was able to keep house price and income growth aligned. But in 2018, stronger price growth kicked in as Singapore benefited from higher foreign demand. This year, valuations have increased slightly, and the market is slightly overvalued.
Source: UBS Global Real Estate Bubble Index 2021 | UBS Global

No irrational exuberance
From mid-2020 to mid-2021, Singapore registered its second-strongest annual price growth over the last decade. In inflation-adjusted terms, home prices increased by 5% compared with the previous year, clearly outpacing the growth rates in income and rents. Singapore’s index score has consequently increased, pushing the city-state’s housing market into slightly overvalued territory according to the UBS Global Real Estate Bubble Index
Rising home prices have been driven by low interest rates, a rebound in economic growth, and the local labour market recovery. Transaction volumes have been trending higher, with firm demand across domestic and foreign buyers. A nascent revival of an en-bloc cycle is also fueling positive sentiment around home prices. At the same time, new supply is expected to decline. Project completion schedules have been delayed becaouse of construction bottlenecks arising from labor shortages and financial difficulties among a handful of contractors.
Rents have increased by 3% over the past year, while vacancies have remained relatively stable. Project delays in the primary market may have diverted some demand to the rental market. With working from home becoming the new normal for many, growing space requirements are also supportive of rental demand.
The government is keeping a close watch on asset price increases and is willing to intervene with adequate property cooling measures. Potential future policy interventions should prevent the formation of a real estate bubble. Given this policy environment, homebuyers in Singapore should not expect capital gains in excess of income growth over the long run.