Market tightness in the residential sector feared coming to a peak

Is there a risk for asset bubble?

According to DBS Vickers Securities residential property prices have climbed to record highs in Asia with mounting mortgage and household debt raising red flags.
Persistent policy tightening moves, it said, have been unable to deter buyers amid an environment of cheap and ample liquidity.
In Indonesia and Malaysia, house prices have appreciated 23% and 37%, respectively, since early 2009 and in Singapore, prices have risen by 60%. In fact, home prices in Singapore
rose the fastest among Asean markets.
On a house price to income basis, the cheapest country in our universe is Malaysia with prices at 4.1x income and Thailand at 4.7x. Singapore, both private and public resale, is at 9.3x and 5.4x, respectively. Consequently, mortgage debt has risen in recent years as households focused on property purchases.
DBS Vickers said that Singapore resident households are now leveraged at 77%, with mortgage making up 45 percentage points of this. It added that although leverage is not as high as the 93% seen during the early 2000 period, households are holding back their consumption in other areas as they focus resources on asset purchases.

So does the current situation in Singapore qualify as an asset bubble?

Here's an answer from DBS:

Despite buyers feeling the pinch, Singapore residential property prices, on average, are nowhere near bubble territory by any conventional measurements. It currently ranks behind Hong Kong in terms of multiples of income while affordability of low-end private homes, based on mortgage service ratio remains at 41% of average monthly income.
While household and mortgage debts as a percentage of GDP have recorded new highs, they are still below those levels in the US and other developed economies. That said, there are
also clearly pockets of stress that have caused unhappiness among Singaporeans, particularly in the lower income segment as income growth lagged asset inflation.
Fundamental undersupply of affordable products in recent years coupled with liberal migration policies in a cheap credit environment has led to the price hike. Looking ahead, we see this market tightness coming to a peak from this year, with the anticipated influx of about 237,199 new private and public housing units until 2017.
We anticipate some degree of indigestion as this happens. Together with the prospect of rising short rates in the medium term, this is likely to result in a moderate price and rental yield correction, to the tune of -5% a year over the next two-tothree years. Together with the financing caps and transaction penalties put in place, we see investment demand being the most adversely affected.
From the perspective of the listed developers, slower volume demand and capped upside in product prices would likely result in margin erosion and lower land prices as developers
become more selective about product offerings. Under this environment, we believe developers who adopt a quick asset turn strategy would weather this environment better.