Hope I can contribute to this topic. The intent is not to change your perspectives but share you what the situation is with a different lens.
There's is a misconception that buying HDB flat is an investment and it could be passed on to the children. This is true and false. It is true that the value of the flat at the point it is sold is transferrable; however, it is not an investment. HDB flats comes with a 99 years lease (meaning the state will recover the property at no cost after this period). This means the useful lifespan of a HDB flat is capped at 99 years regardless of the amount paid at purchase or the appreciation occured to the property.
(
http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20An%20Apartment%20Under%20Design,%20Build%20And%20Sell%20SchemeProcedures%20-%20How%20DBSS%20works?OpenDocument&SubMenu=Procedures)
In general, prices of HDB flats stabilises around a third of its useful lifespan in the 30th year. Afterinwhich, price fluccuations becomes relatively stable compared to the earlier years. At this point, major renovations and upgrading are required to the estate to maintain it's value as it now falls behind the newer estates with mordern facilities and network infrastructure. The cost of rejunvenating of the flats are passed on to buyers and sellers in the market.
That said, HDB flats do not perpetuate in appreciation. Appreciation stops a third into their useful lifespan. To expect the flats to go into perpetual appreciation is the equivalent of trying to present a normal goods as a superior goods in the economics sense. However, this representation is fallacious as HDB flats with its useful lifespan and unattractive aging population in the estate is contradictory to the criteria of being a superior goods.
The reason why HDB flats are seen as an investment to many in Singapore is because their retirement funds invested could not keep up with the escalating cost of living. So properties became an alternative although it is unconceivable how a non movable fixed asset can be viewed as a disposable liquidity.
The continual open door policy of foreign talents helps to drive demands for housing which in effect keeps the prices afloat. However, foreign talents seldom own properties and that they rent instead of buy. So this drives another sector of investors who buy properties for the sole purpose of renting it out. The impact of this is that market demand in this situation becomes unclear as investors speculate what tenants are willing to pay rather than having bona fide buyers going into the buying process and influence the supply prices.
(An Autralian example:
http://www.watoday.com.au/wa-news/immigrants-put-pressure-on-wa-house-prices-20080925-4nvj.html)
(The UK example:
http://www.guardian.co.uk/money/2006/sep/03/business.buyingtolet)
Someone mentioned that singapore operates the same in the property market as in bigger cities like Tokyo, New York or London. Compared to these cities, Singapore has no internal alternatives in landspace. Bigger countries like Japan, United States and United Kingdom has much more flex in determining housing as well as office space. If a business finds central New York too expensive, it can move to other areas or states. The same cannot be said in Singapore. So if alternatives and substitues are not available here compared to these cities, how do we compare our property policies and strategies to them? The onus in Singapore is on the provider or supplier of space and they are the ones who control the market.
However, playing the supply and demand game is a delicate feat that can prove disastrous if it is mismanaged or unexpected economic events occcur (eg. Bank busts, Our retirement funds got wiped out by half through bad investments, mass relocation of the the rich and wealthy, etc.)
So are we a generally a rich bunch of people who can afford to pay any stated market prices? Yes and no. Affordability in it's strictest sense if your ability to service a loan for a purchase as well as pay up a transaction. However, the term affordability seldom or never take into account future risks involved such as you are unable to service the loan mid-way due to unemployment or unforeseen financial difficulties. Another phenomenon to take into account is that the mojority of wealth in most countries are held by that few percentages of individuals as well as families. In general, most of us (household) cannot afford a flat with the current average national income levels in anything more than SGD 300K and it should be serviced or paid up within 7 to 10 years. The fact that we still manage to hold on to most of our properties (that doesn't mean that there aren't as many who loses theirs) in HDB is due to timely governmental interventions and incentives such as grants, delayed loan service schemes and recession perks. But these policies do not change that fact that on the basis of economics, at the current rate, properties are becoming unaffordable or has already become.
Another comment that Singapore is generally a rich bunch need a further indepth research. Accoding to a report, the world's richest 1% own 40% of all wealth. If the median is stable, we can assimilate that it is close or similar to our country. Half of our country's wealth are in the hands of that few percentages of elite. (
http://www.guardian.co.uk/money/2006/dec/06/business.internationalnews)
That said, if you ask me whether a bust will happen?
Yes it will and it is inevitable. Consider the years of top gear progress and overdrive, what would a little bust compared to. The only thing one should expect is the magnitude of a property bubble and how policies can be set to control or mitigate some of the damages caused by a bust.
When will it happen?
Your guess is better than mine. Given the rate it is heading, I am expecting one within 7 years from now.