DESPITE soaring property prices here, there is no bubble in Singapore's property market, preliminary findings from a study by National University of Singapore (NUS) economists have shown.

Unlike in the early 1980s and mid 1990s, when residential property price inflation shot above its long-term equilibrium level - or what is dictated by fundamentals - the rise in housing prices this time around is still below its equilibrium, according to the study by a team led by Associate Professor Tilak Abeysinghe, deputy director of the Singapore Centre for Applied and Policy Economics at NUS.

Initial findings from the study, which is a work-in-progress, was presented to a small audience at the Singapore Economic Policy conference on Thursday.

House price inflation is expected to hit 18 per cent this year, before easing to 13.7 per cent next year, and fall to around 3 per cent in 2009 and 2010, the NUS team's model projected.

They also found that it takes a long time for property price inflation (PPI) to adjust to its long-run equilibrium, and that a 1 percentage point increase in PPI at one point in time would lead to a spurt of construction investment four to eight quarters down the road, but its effect fades thereafter.

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