SINGAPORE ECONOMY

The Impact of GDP And Interest Rates On Property Prices

14 JUNE 2025
Edric Ho
Edric Ho
Writer, Editor & Data Geek

Defying Global Economic Turbulence

Singapore’s property market has long been seen as a barometer of the nation's economic health. Yet, despite fluctuations in GDP growth and shifts in global interest rates, the real estate sector here has consistently demonstrated remarkable resilience.

From financial crises to pandemic disruptions, property prices in Singapore have remained relatively stable—or even grown—reflecting the market’s strong fundamentals, prudent policy measures, and enduring local demand. This article explores how macroeconomic indicators like GDP and interest rates influence property prices, and why Singapore's property market continues to defy global economic turbulence.


Singapore's Property Price Index Corresponded To Major Events

We first take a look at the macro picture, analysing the Property Price Index against significant events such as global crises and cooling measures. 

The Singapore Property Price Index (PPI) is a statistical measure that tracks the overall price movement of private residential properties in Singapore over time. It is an index with 2009-Q1 defined as 100; and price movements are defined with respect to that quarter. 

The chart below illustrates 

  • Singapore's Property Price Index since 1997 Q1 
    • Base Quarter 2009-Q1 = 100
  • Mapped against significant events including Global Crises, Cooling Measures 

Overview of Significant Events

  • AFC : Asian Financial Crisis 
    • The 1997 Asian Financial Crisis was triggered by a combination of macroeconomic imbalances, speculative capital flows, and policy missteps, particularly in Thailand, and quickly spread across East and Southeast Asia
    • In 1997, Singapore’s GDP grew by 8.3%; however in 1998, growth plunged to just 0.4%—a near-recession.
  • DotCom Bust / SARS
    • The DotCom Bust affected Singapore's GDP :
      • 2000: Strong growth of 9.9%.
      • 2001: Growth contracted to -1.1%, marking Singapore’s worst recession since independence (until the 2008 crisis).
    • SARS occurred in Singapore between March and May 2003.
  • GFC : Global Financial Crisis 
    • The 2008 Global Financial Crisis was caused by a confluence of systemic weaknesses in the global financial system—especially in the U.S.—centered around subprime mortgages
    • The global recession reduced demand for Singapore’s exports, especially in electronics, finance, and shipping
    • It also affected Singapore's GDP:
      • 2007: +8.8%
      • 2008: +1.3%
      • 2009: –0.6% (first full-year recession since 2001)
    • The Global Financial Crisis ended through a combination of extraordinary government interventions, central bank actions, and policy reforms aimed at stabilizing financial markets
    • In the U.S., the Troubled Asset Relief Program (TARP) authorized $700 billion to buy toxic assets and recapitalize banks
  • 2013 Cooling Measures 
    • Following the end of Global Financial Crisis in 2009, prices continued to rise rapidly
    • From 2009 to 2012, private residential property prices rose by more than 50%
    • In 2013, the Singapore Government issued several rounds of Cooling Measures aimed at managing the then sharp growth in property prices 
    • The slew of cooling measures included : ABSD, MSR, TDSR 
    • Read : The Complete Timeline of Singapore's Property Cooling Measures
  • COVID
    • COVID-19 first reached Singapore on January 23, 2020.
    • Covid had a profound effect on the Singapore economy - Singapore's largest GDP contraction on record occurred in Q2 2020, where it shrank by –13.3% year-on-year
    • For the whole of 2020, GDP contracted by 3.9% 


Analysis

  • During events such as the Asian Financial Crisis, Dotcom Bust and Global Financial Crisis, we can observe the evident adverse impact on the Property Property Index which dipped on a weakening of the real estate market 
  • The Singapore property market during those events was one that was more susceptible to being influenced by fluctuations in the global economy
  • Following the end of Global Financial Crisis in 2009, the property market recovered and private residential property prices rose by more than 50% from 2009 to 2012, 
  • The 2013 Cooling Measures were crafted to dampen speculative demand, promote financial prudence, and stabilize the property market.
  • This resulted in a subsequent 15 quarters of market correction 
  • Policies such as TDSR and LTV ensured that property buyers who entered the market were not over-leveraged, hence decreasing the presence of speculation 
  • This created a resilient real estate market, which was on full display during the 2019 Covid crisis - despite Singapore's largest GDP dip in Q2 2020, the property market did not dip but continued its growth 

GDP At Current Market Prices VS Property Price Index

In the following chart, Singapore's GDP and the Property Price Index are compared on a quarterly basis:

As we have observed from the earlier section, global events such as the Asian Financial Crisis, Dotcom Bust and Global Financial Crisis did result in contractions in Singapore's GDP. These contractions in GDP also extended their influence on the real estate market, causing a drop in prices. 

However, with the 2013 Cooling Measures creating a more stable market and ensuring that market entrants are not over-leveraged nor purely speculative, subsequent dips in GDP such as in Q2 2020 and 2023 did not cause property prices to drop. 


Singapore's GDP YOY VS Non-Landed New Home Sales PSF

The chart below illustrates 

  • Singapore's GDP on a YOY basis 
    • If the value is positive, it means that GDP rose as compared the year before 
    • If the value is negative, it means that GDP contracted as compared the year before 
  • New Homes Sales PSF averaged across all regions of Singapore, for non-landed property types 

The trends are similar for new home sales as well - periods of contractions in GDP corresponds to dips in New Home Sales PSF. 

At the same time, it is also crucial to recognize that contractions in GDP provides an opportunity for market entry - as the subsequent recoveries in GDP also results in increases in New Home Sales PSF. 


Non-Landed Home Sales PSF Vs Interest Rates

  • Singapore's interest rates began rising noticeably in early 2022, coinciding with global inflation pressures and U.S. Federal Reserve tightening
  • March 2022: The U.S. Federal Reserve kicked off its first rate hike since 2018 to combat surging inflation
  • 2022 onward: Singapore’s domestic rates—like SORA-based lending rates and mortgages—started climbing in step with Fed hikes, typically with a slight delay (about one quarter) .

In the above chart, it is evident that the impact of interest rates on property prices in Singapore is generally more muted as compared to GDP trends. 

Following the 2008 Global Financial Crisis, an extended period of low interest rates helped to invigorate the Singapore property market. 

Between 2022 and 2024, global interest rates rose sharply. Singapore's home loan rates followed suit. Despite that, property prices (especially in the private residential and HDB resale markets) remained relatively resilient, supported by strong demand, limited new supply, and buyers with healthy financial profiles.

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