Property Prices Out of Whack


The HDB resale price index has set a record high of 140.0 according to HDB’s flash estimate released early this month.

More than half a year into Singapore’s “worst” recession and after private property prices crashed more than 20%, the resilient HDB prices manage to buck the trend and even set a national record – the RPI index is at its highest point since its inception in 1990. It’s even higher than the 136.9 set in 1996 during the major property bubble just before the Asian Financial Crisis.

Something must be wrong.

Perhaps the stimulus package is working too well, so much so that the people don’t feel the pain.

This can be dangerous.

Even private property prices have started edging up in Q2, by more than 10% in the central region based on research by DTZ. Some experts claimed this is due to HDB upgraders who benefited from the bouyant HDB prices.

A friend likened stimulus packages to taking painkillers – a right amount numbs you from the pain and aids recovery, but too much of it will excite you in a wrong way and kill you after a while.

Fortunately, we have some sensible advice from various quarters.

Sunday Times editorial (5 Jul 2009) advised young couples “not (to) follow the herd blindly” and to “buy an HDB flat first.”

Just yesterday, National Development Minister Mah Bow Tan said, “there are about over 40,000 (private property) units coming onto the market in the next three or four years – I think people must know that.” (ST, Jul 10, 2009; boldface mine)

Even DTZ said that “without a clear recovery in sight for the US and Singapore economies, the price recovery in Q2 2009 is not sustainable and sales volume would be affected if prices continue to rise”. The Q2 price gain is a “blip supported by buyers’ fears of missing the bottom, pent-up demand and low interest rates – rather than economic fundamentals.” (BT, July 4, 2009).

And finally, the government has introduced its first cooling measure since the scrapping of DPS by proposing to impose a capital gains tax on those who sell a second property within 4 years. Citi Research says this tax will “curb any excessive speculation in the market” and “speculators may try to get out of the market early before (the proposed) implementation next year.”


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  1. Hi. I took one of your chart of STI vs PPI and noticed a few interesting things about the PPI relationship to the STI.

    My blog :

  2. How much to expect for property taxes? What are the best options in your opinion. Any info much appreciated. Thank you in advance.

    Kind Regards,

  3. The cooling measure has no effect on the showroom crowds. The Gale condo in Loyang has got overwhelming response selling more than 50% despite a $700psf price tag, just like many other launches all over the island. Do not underestimate the power of heartlanders in Singapore. We are all very wealthy!

  4. Pingback: Know Anyone Retrenched? | - Your Salary in Singapore

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