How well do Singapore homes really hedge against inflation?

ALTHOUGH residential properties in Singapore may potentially serve as an inflation hedge in the long run – that is, over at least a decade – investors should still bear in mind the likelihood of shorter-term periods when home prices are falling while inflation soars.

Furthermore, purchasing homes when market prices are at fresh highs can bring mixed results when it comes to real returns, according to an analysis by the Institute of Real Estate and Urban Studies (IREUS).

The research institute took a comprehensive look at longitudinal data to examine how the residential segment has performed vis-a-vis inflation. It compared the movements of price indices of Housing Board (HDB) resale flats and private housing as well as core inflation, which excludes accommodation and private transport costs.