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So Singapore has a high cost of living (second highest in Singapore) and low wages, making the average Singaporean purchasing power comparable to that of KLites.

Almost.

To approximate the cost of accommodation, UBS used average rent (page 19). Fair enough – in most of the cities studied, rentals constitute a huge proportion of homes. Not so in Singapore, where more than 80% of Singaporeans live in their own HDB flat, and most of the rest own their home.

Due to the fact that the residential market is largely dominated by HDB, private property focuses on the mid- to high-end – S$700psf, the higher end for HDBs, is more like the minimum for low-end private property.

There is little filtering in the private market – a lot of properties get redeveloped after a few decades, unlike in many other comparable cities. Furthermore, because foreigners can’t buy new flats, and only PRs can buy resale flats, demand from Singapore’s huge non-Singaporean population is focused on private property, again raising prices there.

The key part about HDBs is there are strict restrictions on renting out your own HDB. This cuts supply, pushing rental prices up. The demand structure is also different – buying a HDB flat ends up being much cheaper than renting because you can’t use your CPF (compulsory retirement provident fund) monies to pay rent. Where else, the rental market is dominated by foreigners – more transient, shorter leases are the norm.

All in all, the heavy, and very unique, government intervention in the residential property market makes apartment rents a very poor guide to the cost of housing. UBS’ numbers are pretty accurate if you’re a foreign resident in Singapore, but completely off-base if you’re in your own HDB flat.

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