With current housing affordability in Singapore stretched and close to one standard deviation above mean levels, demand for private homes could taper off if household income doesn’t accelerate in tandem with property prices, says CLSA.

It adds, Singapore’s current housing affordability is 7.5x the average annual household income vs the historical average of 6.7x, with prices for the mass-market and mid-end housing segments already 16.7% and 9.0% above their respective peak levels; “although record low mortgage rates can spur sales volume, stretched affordability above historical mean will cap price growth in our view and hence RNAV for developers.”

It says, any additional housing-market curbs from the government could also cap RNAV expansion for residential developers. Prefers developers with exposure to the high-end office and retail segments, such as CapitaLand (C31.SG), Keppel Land (K17.SG) and Fraser & Neave (F99.SG).