Singapore Will Learn a Lesson in Irish Property Bubbles

Reading through the daily newspaper in Singapore is like travelling backwards in time to Ireland in 2005.  The similarities are remarkable. The Irish nation had grown accustomed to its new-found titles of wealth and in Singapore, the outlook is very much the same: growth in the economy has been staggering over the past decade and has been surprisingly resilient against volatile international markets.

The levels of personal wealth of the island nation are amongst the highest in the world and there is a thoughtless optimism in it lasting. However, there are frightening indicators that were blindly ignored in Ireland that could be staring Singapore in the face.

The proud confidence embellished by recent economic growth is easily noticed, especially when you're hearing the locals say "the only way property prices can go is up!" and housing construction catering for non-Singaporean residents has boomed. These conditions are providing the building industry with an open invitation to grow. While Singapore might have its export market to fall back on should the property market fall through, it will be of little solace for the man on the street who'll be saddled with negative equity, for the lifetime of his 50 year mortgage.

The most telling aspect of Singapore's property market is to be found in the national newspaper, the 'Straits Times'. Saturday's edition managed a cool 15 pages of property adverts in a 48 page newspaper. The front page relays comforting tales of prudent government action and international architecture prizes for the recently opened World Building of the Year 'Gardens by the Bay', confirming in the hearts and minds of Singaporeans that they too could live in somewhere architecturally significant. Their pride is nestled closely to the cultural identity, a stinging reminder of Irish developers' Docklands-trophies of glass and concrete.

"Buy a house, WIN a car!"

These shared characteristics are almost painful to an Irish reader. When it was announced that the price of apartments within the state-run social housing scheme had achieved record breaking levels, it should have come with a wink and a nudge; some sort of acknowledgement that there could be something afoot.

House prices will go up for another year or two and on a typically stifling Saturday afternoon, after weeks of intently visiting the show-houses that could be their future home, a young couple will quietly discuss their bidding price out of earshot of the estate agent. In the hall of this 2 bedroom apartment, slightly too far from the city centre, they will struggle to justify the asking price. They will appreciate the large windows and especially the spacious layout in the kitchen (for such small square-footage) and reconsider how close they are to the new subway line.

They will look to each other and know that they are both thinking "No; it's just too much, we can't afford this" and politely make their thank yous and leave. They will tell their friends (the ones who came to the wedding) that they will be renting for another year just to see if the market can even out and they'll see how things are in 12 months, and that will be the end of Singapore's property bubble.

Irish people thought they were special; that they would break from all historical trends in property bubbles and ride through Morgan Kelly's doubts and criticisms with a galloping economy and certificates of "Richest Nation Per Capita" tucked into nouveau riche saddlebags. Singapore has joined the bandwagon, but it is no pioneer.

It is a freshly painted cart on a very well worn road.