In 2007, Iceland was celebrated for attaining the world’s highest standard of living according to the U.N.’s annual Human Development Index report. In less than a generation, the tiny North Atlantic island had transformed from a traditional fishing and tourism-based economic backwater into a finance and banking powerhouse, rocketing the country’s wealth and living standards to enviable new heights. Sadly, Iceland’s economic boom was an illusion based on a reckless credit and asset bubble that led to a terrifying financial crisis when it popped in 2008.

Singapore’s property bubble has inflated the average price of a new 1,000-square-foot condo to approximately $1 million to $1.2 million Singapore dollars ($799,000 to $965,638 U.S.), effectively pricing out many middle class and younger workers, while transferring wealth – at least until the bubble pops – to older and wealthier Singaporeans.

A 2013 study by The Economist magazine showed that Singapore has the world’s third most expensive residential property market on a price-to-rent basis, making it 57 percent overvalued versus its long-term average, behind only Canada and Hong Kong (which I consider to have property bubbles of their own). Singapore’s rental yields are miniscule at under 4 percent, and the country’s 25.38 average house price-to-income ratio confirms the overvaluation reading given by the price-to-rent ratio. In contrast, the U.S.’ average house price-to-income ratio is 2.16, while Germany’s ratio is 4.78, the U.K.’s ratio is 6.73, and Japan’s ratio is 6.99.

Singapore’s rapidly rising housing costs have resulted in an inflation problem in recent years, which is unsurprising considering how much the country’s money supply has risen. An increasing money supply leads to the dilution of a currency’s value, which manifests itself in the form of inflation or higher living costs. As a result, Singapore now ranks as one of the world’s ten most expensive cities.

The fuel for Singapore’s property bubble is provided by a growing mortgage bubble, which has greatly contributed to the rapid rise in household debt that was discussed earlier. Singapore’s mortgage rates – which are based on the SIBOR interest rate – are at all time lows, which is encouraging the country’s mortgage borrowing binge. Mortgage loan growth rose by 18 percent each year over the last three years, bringing total outstanding mortgages to 46 percent of Singapore’s gross domestic product (GDP) from 35 percent. Nearly a third of Singapore’s mortgages are utilized for speculative property purchases rather than owner occupation, which is an indication of the level of speculative fervor in the country’s property market.

Singapore’s government has enacted various cooling measures to slow the residential property bubble’s growth, such as requiring foreign buyers to pay a 10 percent Additional Buyer’s Stamp Duty, capping loan tenures at 35 years, and mandating more conservative loan-to-value (LTV) limits. While these cooling measures have slowed the property bubble’s growth to an extent, they do not address the bubble’s root cause: abnormally low interest rates. Furthermore, these measures do not change the fact that Singapore’s property bubble has already been inflated to economy threatening levels, nor do they help to deflate the existing bubble. The damage (to be realized in the future) has already been done and is “baked into the cake”; Singapore’s property bubble cooling measures are tantamount to putting a Band-Aid on a flesh wound.

Singapore’s banks are also exposed to the ultimate popping of the country’s property bubble because they hold almost half of their credit portfolios in local property-related loans, with residential mortgages accounting for nearly a third of their overall loan portfolios – a record high. Approximately 70 percent of Singapore’s mortgages have floating interest rates and almost a third of Singapore’s mortgages are used for speculative property purchases.

After three years of 18 percent annual mortgage loan growth, total outstanding mortgages rose from 35 percent of Singapore’s gross domestic product (GDP) to 46 percent, which poses a significant threat to the country’s banking system. To make matters worse, bank loans for building and construction combined with total outstanding mortgages surged from 62 percent to 79 percent of Singapore’s GDP in the past three years.

Like U.S. and Icelandic banks during their countries’ housing bubbles of 2003 to 2007, Singapore’s banks are experiencing good times as the bubble inflates, but are heading for a crisis when interest rates eventually rise. Singapore’s government is limited in its ability to bail out its financial institutions due to its significant public debt, which is one of the world’s highest at over 110 percent of the city-state’s GDP – a figure that is worse than the U.S.’ 106 percent public debt to GDP ratio.

Singapora destined to be the poor yellow trash of Asia?

Heres the survey that published that 56% want to emigrate. Most are trapped on the treadmill.

The Singapore masters have used the free trade concept to allow the import of low wage slave labor which suppresses the wage demands of Singaporeans. If this is a democracy how can they allow companies to pay imported workers less than they pay Siingaporeans?

Singapore is very contrived and controlled to the benefit of the masters, the Lee Kuan Yew family and their stooges.