ON Jan 13, independent economic analyst and “anti-bubble activist” Jesse Colombo posted a lengthy commentary on http://www.Forbes.com titled “Why Singapore’s economy is heading for an Iceland-style meltdown”. To date, this has garnered more than 770,000 page-views, including from Singapore-based investors.
Mr Colombo argues that ultra-low interest rates have fuelled a “dangerous credit bubble” in the housing sector, where “Singapore’s ratio of household debt to gross domestic product recently hit approximately 75 per cent . . . up from 55 per cent in 2010 . . . household debt has risen by 41 per cent since 2010, while household income has increased by only 25 per cent and wages by a paltry 15 per cent”. Because “Singaporeans are going into debt to invest in property or buy more expensive houses than they can afford . . . Singapore’s property prices have approximately doubled since 2004, and are up by 60 per cent since 2009”.