Is price correction over for Singapore's housing market?

Buoyant supply still inflates vacancy rates.

Singapore's household incomes have increased by almost 20% since 2011 on the back of solid economic growth. But this is hardly a good news for the housing market, as it is likely to deteriorate further in values, rents, and occupancy rates.

According to UBS Global Real Estate Bubble Index study, the housing market is still in grey clouds as supply outpaces demand growth.

The study revealed that private market housing is still hardly affordable as the price-to-income ration for a 60 sqm flat is still at an elevated level of 12. This is in contrast of public housing representing 80% of the total market.

"Moreover, multiple rounds of restrictive government policies to cool down the property market have weakened demand," the study noted.

With this, vacancy rates have increased from 6% to 9% in the last three years, paving way for price correction to linger until next year.

However, the study also concurred that due to the difficult market environment, the supply growth is now contracting.

It added, "Housing permits have reached the lowest point since the early 1990s, which may
prepare the ground for a turnaround in the medium-term."