Homes are more affordable now than 20 years ago

It also now takes 4.8 years to buy a home, compared to 7.3 years in 2010.

Due to falling home prices over the last bear cycle and rising household income, housing affordability in Singapore has improved meaningfully since 2010, with the private home price-to-income ratio falling to 20-year lows, the Bank of Singapore (BOS) revealed.

According to a report, prices in Singapore bucked the trend in major peer cities, such as Hong Kong, Tokyo, Sydney, London and San Francisco, where home prices have instead increased and housing affordability has worsened over the same period.

Citing data from JLL and Bloomberg, housing-to-income ratio since 2010 in Singapore dipped from 7.3 years to 4.8 years. Meanwhile, in Hong Kong it rose from 11.4 to 18.1, in Sydney it rose from 9.6 to 12.2, whilst in Tokyo, it rose from 7.1 to 10.

BOS revealed that the current housing recovery so far has been mostly driven by domestic buyers.

In 2017, there were only 1,600 transactions attributed to foreign buyers, markedly lower than the long-term average of 2,200 transactions per year and the last bull market's average of 3,600 per year.

In terms of percentage of total transactions, only 5.6% of transactions in 2017 were attributed to foreigners versus a long-term 18-year average of 8.7%.

After a four-year bear market, Singapore housing prices bottomed out only late last year, after declining some 12% from the last peak in 2013.

BOS head of strategy Eli Lee said, "We believe the Singapore housing market is in the early stages of a bull cycle and forecast for Singapore housing prices to increase 3% - 8% in 2018."

In 2018, private primary sales volume is expected to go up to 12,000 to 15,000 units, up from 10,600 units sold in 2017.

Here's more from Bank of Singapore:

Notwithstanding healthy share price performances over the last two years, Singapore developers have not fully priced in the bull cycle, in our view, and we expect the share price uptrend to continue in 2018.

The price-to-book ratio of the FSTREH Index (the Straits Times Real Estate Holdings & Development Index) currently stands at 0.71x.

This is up significantly versus the 2016 trough of 0.56x but still almost one standard deviation below the long-term average of 0.82x.

Looking ahead, we believe stronger sales performance at new launches, firmer buyer sentiments driven by higher prices and rentals, and the potential re-emergence of a larger set of foreign buyers to be key catalysts for developer share prices.