With 2015 Q1 numbers updated, you can see from the above graph, the SRX Price Index (SPI) for private condos generally tracks GDP in terms of direction.
There have been two exceptions. Both SARS and the Cooling Measures dampened property prices while median household income and GDP continued to increase.
It makes sense that the SPI should track GDP unless there is an external shock that specifically impacts the property market.
As Mr. Lee Kuan Yew said, “If Singapore prospers, their flat values will appreciate and they will share in the growth. Home ownership motivates Singaporeans to work hard and upgrade to better flats for a better quality of living."
Since 1995, when property transaction data became readily available, the SPI has lagged both median household income and GDP. In fact, GDP has gained 6.0% per annum while the private condo prices have increased only 3.4%. (Based on 2015 Q1 flash estimates)
Homes store household wealth. As such, shouldn't we take corrective action when the SPI doesn't keep pace with GDP?