What is a Property Bull Run and Is It Already Happening in Singapore?

These days, we often hear that a property bull run – where prices increase dramatically in a relatively short time – is just over the horizon. But how true is this? In this article, we examine the current property market, exploring the reasons for and against a bull run happening, as well as conclude whether or not you should let it affect your purchasing decisions (spoiler alert: you shouldn’t).

First, let’s look at what happened during Singapore’s last property bull run.


The Post-Global Financial Crisis Property Bull Run (And Its Aftermath)

Right after the Global Financial Crisis of 2008 to 2009, Singapore’s property market took off. The Private Residential Property Price Index went from a low of 95.3 in the second quarter of 2009 to 147 in the third quarter of 2011 – a 54% increase in just over two years. Meanwhile, the HDB Resale Price Index went from 101.4 to 135.4, a more modest but still substantial 33.5% gain over the same period.

We all know what happened next. The Singaporean government deemed the market “too hot” and decided to cool it off. Although the first property cooling measures begun in late 2009, they got progressively tougher until the peak of the market in 2013, when ABSD was significantly increased and MAS’s implemented a new debt servicing framework. Up till today, property prices have yet to surpass peak-2013 levels.

Read More

  • Is It Time for Singapore to Remove ABSD?
  • How Does The TDSR Affect Your Home Loan?

So, we now know what happened during Singapore’s last property bull run. But why did it happen? In fact, what are some of the main reasons property bull runs happen in the first place?



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What is a Property Bull Run? 

The iron law of supply and demand tells us that when demand exceeds supply, prices increase. Therefore, a property bull run happens when there are more buyers on the market than sellers for a sustained period. 

Common Factors That Can Trigger a Property Bull Run

Here are a few common factors that can cause the above:

  • Low interest rates.
    The Global Financial Crisis was the original catalyst for the relatively low interest rates in recent years (before COVID-19, of course). The 3-month SIBOR rate had fallen to 0.7% in January 2009 from a peak of 3.5% in 2007.
  • Rising household incomes.
    From 2007/2008 to 2012/2013, average monthly household incomes grew by 6.1% per annum – significantly above the growth rate in subsequent years.
  • Population growth.
    Between 2007 and 2013, Singapore’s resident population increased from 3.58 million to 3.85 million – a 7.5% growth. Nothing impressive, but consistent.
  • Economic confidence.
    The Singapore Business Confidence Index – which frequently dips into negative territory – stayed positive from the 2009 to 2011 period.
  • Supply lag.
    Because of the construction period, the property supply can never adjust as quickly as demand (which also creates cycles). Prior to the Global Financial Crisis, housing supply was very low, which contributed to the subsequent bull run.

Those are some general factors that can cause a property bull run. But what about today’s environment – is it supportive (or not) of an upcoming bull run?


Are We Poised for a Property Bull Run in 2021 and Beyond?

To answer this question, let us first study the price trend. According to the PropertyGuru Singapore Property Market Index, property prices have remained largely flat since end-2016.

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This is corroborated by both the HDB Resale Price Index and the Private Residential Property Price Index. From the fourth quarter of 2016 to the third quarter of 2020, the former saw a 0.53% decline. Meanwhile, although the latter increased by 10.9% from up till the first quarter of 2020, the latest data available, this was before the full effects of the pandemic had kicked in. Even looking at the Urban Redevelopment Authority’s most recent data, private home prices increased by 2.2% for 2020 – less than the 2.7% seen in 2019.

So, no, we are not currently in the middle of a property bull run. But what about the near future? Here are a few reasons both for and against that happening.


6 Reasons Supporting a Possible Upcoming Property Bull Run

1. Resilient Prices Amid a Pandemic

Looking at the above price trends, we can see that there has been no significant decline in property prices – despite a global pandemic and widespread economic uncertainty. In fact, prices have increased slightly.

2. Rock-bottom Interest Rates

As of end-Dec 2020, the 3-month SIBOR is at an all-time low of 0.41%. Home loans under 1.8% – both floating and fixed – can also be easily found.

3. Well-Managed Handling of the Pandemic

Compared to most of the world, Singapore has demonstrated superior handling of the coronavirus pandemic, having moved to a looser Phase 3 of reopening at the end of 2020. Vaccination programmes are also being rolled up, which will further boost business sentiment.

4. Work-from-Home Culture

Today, many Singaporeans have gotten used to and may even prefer working remotely, from home. While loosening restrictions will likely see many returning to their offices, the cultural shift has already happened. As more homes continue to double as working spaces, property prices for larger residential units may see an uptick.

5. Market of “HDB Upgraders” Flowing into 2021

We estimate that about 20,000 HDB units will or have already come off their Minimum Occupation Period. These potential “HDB Upgraders” could thus significantly add to property demand.

6. Foreign Investors have Remained Largely Unaffected

For the first nine months in 2020, non-Singaporean citizens accounted for 20.4% of non-landed home sales. Further, Singapore property is still seen as a “safe haven” by international investors.


4 Reasons a Property Bull Run May Not Happen 

1. High Probability of Government Intervention

In September 2020, National Development Minister Desmond Lee labelled property cooling measures as all the more necessary for the well-being of Singaporeans amid the pandemic. This is a clear signal – the government can and will intervene if it deems the rise in property prices to be unsustainable.

2. Current Cooling Measures Are Still in Place

Although certain economic conditions – namely ultra-low interest rates – mimic the conditions of the last bull run, many others don’t. In particular, the cooling measures that stopped the last bull run in its tracks are still in place, and indeed have been further strengthened since then.

3. MAS Support Measures Have Yet to Be Fully Lifted 

MAS’ reliefs for property loans have been extended until mid-2021. As such, we do not yet know how the market will react when these are completely lifted.

  1. Full Impact of Pandemic on Singaporean Economy Still Uncertain

Singapore’s economy took a 5.8% dive in 2020 – its worst recession since independence. And while the data is improving,  such as fourth-quarter activity picking up and the unemployment rate falling for the first time in November, uncertainty remains high. 

Now, just because there are six reasons for a property bull run and four reasons against, this does not mean that a property bull run is more likely (not how this works). After all, each point is not equally weighted – as we’ve seen, the government alone can completely alter the dynamics of the market. 

At this point, all we can do is speculate. If anyone tells you that they know “for certain” that a property bull run is coming – they’re lying (and maybe trying to sell you property). Still, a bull run remains a possibility. So, how should that affect your home purchase and financing decisions?


Should You Be Influenced by Talk of a Potential Property Bull Run?

Talk of a potential property bull run is a great way to stoke FOMO (the ‘fear of missing out’) and encourage you rush into hasty decisions. You shouldn’t fall for this – especially if you are looking to purchase property to stay (as opposed as an investment).

What you should do instead? Stick to the basics. These are:

Focus on Affordability

Biting off more than you can chew is a painful mistake when it comes to a long-term commitment like property. Use our Mortgage Affordability Calculator to make sure this doesn’t happen to you (plus a whole bunch of other reasons too). This also involves, taking an honest assessment of your own financial situation, such as your cash reserves and cash flows (both present and future).

Give Yourself an Adequate Margin of Safety

Risk is what you don’t plan for. Reduce your risk by giving yourself a proper buffer when assessing your own affordability and financial situation.

Maintain a Good Credit Rating

A bad credit rating increases your chances of getting your home loan rejected or only getting a lower limit approved. Here’s how to find out your credit score (and a few tips on improving it).

Do Your Research

For a $500,000 30-year mortgage, the difference between an annual interest rate of 1.5% and 2.0% is almost $45,000 in interest costs. A big price for the seemingly small mistake of not doing proper research and seeking out the best home loans. This also extends to choosing the right property for you. Remember, you’re going to be staying there for years (and with work-from home, spending a lot more time there each day). Do your research properly.


Need Help Making the Right Decision?

With so much information out there – a lot of it conflicting – it can be tough to know what the best decision is for you. That’s why our expert Home Finance Advisors are on standby to dispense objective, personalised advice tailored to your specific situation. Just go this page and fill out a short form and one of them will get in touch within a few hours. And for more information on home financing and buying properties, please check out our extensive database of articles.


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This article was written by Ian Lee, an ex-banker turned financial writer who hopes to use his financial background and writing skills to help raise people’s financial literacy levels – a necessity in our modern world.

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