This is the diagram that Forbes magazine produced in support of their claim that Singapore is experiencing a ‘property price bubble’. Does this look like a bubble to you?
Bubbles should look like an ever-increasing, exponential growth in prices – explosive growth, in fact, driven solely by the expectation that prices will continue to rise tomorrow simply because they rose yesterday. The diagram hardly fits the bill – there are periods of rising prices, then falling, then rising a bit, falling and steady and rising and falling etc etc…in fact, the picture could be of any normally functioning asset market that one could nominate. What is clear from this picture is that Singapore property prices have not been rising incessantly, nor exponentially for that matter, so that a bubble is hard to justify.
Moreover, the 20 year average return is just 3.5%, while the 18 year average return a paltry 1%. 10 year average returns measure 6.2%.
Why would Forbes make a claim without the evidence to support it? Sensationalist headlines sell magazines it seems, and gutter journalism has never based itself on facts. Forbes credibility is the real popped bubble in this beat up story.