According to the latest Global Real Estate Bubble Index by UBS group, Singapore is ranked 4th as the city for having the most unaffordable housing in the world. With a price-to-income ratio of 13, Singapore ranks just behind Paris, London and Hongkong.

Singaporeans’ low purchasing income is the main reason behind the finding even though housing prices have steadily been declining 6% in real terms since 2013. Housing prices have spiraled out of control because of low mortgage rates, and as the Singapore economy continue to deteriorate, UBS expect housing prices to fall further:

“Despite the real price drop of 6% and earnings growth of 4% since 2013, the affordability of private market housing remains low, with a price-to-income (PI) ratio of 13. In addition, the price-to-rent ratio is at an elevated 32, inter alia, as a result of low mortgage rates. Therefore, the risk of further house price corrections remains substantial, especially if the economic outlook deteriorates. But the dominant position of social housing in Singapore limits any direct impact of private market house-price declines on the overall economy.”

UBS also confirmed that a housing bubble is brewing in Singapore with an index score of 0.56 – an overvalued territory. Singapore is also the only country which is ranked “bubble-risk” according to UBS.

Graphic from UBS Group Bubble Index report 1
Graphic from UBS Group Bubble Index report 1


The findings by UBS contradicts the ruling party Ministers’ conclusion that housing is affordable in Singapore. According to the Deputy Prime Minister Tharman, a Singaporean earning S$1,000 a month can own a flat. Singaporeans have initially poured sarcasm at his remark but have since came to terms as they vote in the ruling party PAP with a 70% majority.

You may view the original report from UBS here.