Lessons from the U.S. Lock-In Effect and Their Applicability to the Singapore Context
February 2026
Urban Economics & Housing Policy Analysis
Executive Summary
This case study examines the structural parallels between the U.S. housing market’s widely documented “lock-in effect”—in which housing turnover fell to a 30-year low below 2.9% in 2025—and analogous, though institutionally distinct, constraints within Singapore’s dual public-private residential market. While Singapore’s market dynamics are mediated by a uniquely interventionist policy architecture, including the Housing and Development Board (HDB) framework, the Minimum Occupation Period (MOP), and a layered cooling-measure regime, the fundamental tension between affordability, supply constraints, and transaction velocity is equally salient.
Key findings indicate that Singapore avoids a classical mortgage rate lock-in but faces its own structurally embedded form of transaction suppression, arising from the MOP, the cost of replacement properties, escalating private property prices, and the steepening of the upgrade path. HDB resale transaction volumes declined notably in 2025, and private resale inventory remained constrained. However, unlike the U.S. context, Singapore’s market exhibited price moderation in 2025 due to aggressive supply-side intervention and incoming MOP-driven resale supply.
The outlook for 2026 is cautiously positive: approximately 13,400 flats reaching MOP will materially increase resale supply, mortgage rates continue to ease, and government policy has deliberately stepped back from crisis-mode signalling. Solutions examined include demand-side grant enhancement, supply scheduling, the new Standard/Plus/Prime HDB classification framework, and fiscal measures targeting the upgrade pathway for middle-income households.
- Introduction: Contextualising the U.S. Lock-In Effect
The U.S. housing market in 2025 exemplified what economists term the mortgage rate lock-in effect: homeowners who secured ultra-low fixed-rate mortgages during the 2020–2022 pandemic period (often below 3%) became highly reluctant to sell, as doing so would require surrendering their favourable rate and refinancing at prevailing rates exceeding 6–7%. This behavioural constraint—rational at the individual level but contractionary at the aggregate—drove housing turnover below 2.9%, a 30-year nadir, down from nearly 4.5% at the 2021 peak.
The downstream consequences were substantial: constrained inventory sustained elevated home prices, reduced transaction-linked economic activity (legal, brokerage, renovation, and home improvement services), and disproportionately excluded first-time buyers from the market. Home Depot’s Q4 2025 earnings commentary provided a useful corporate vantage point, with CEO Edward Decker characterising the market as stuck in a “repair rather than replacement cycle”—homeowners deferring large discretionary renovation projects due to anticipated but perpetually deferred relocations.
Singapore, as an advanced urban economy with one of the world’s highest homeownership rates (approximately 90%), warrants rigorous comparative analysis. While the mortgage structure differs materially—Singapore’s variable-rate environment means no equivalent rate lock exists—the city-state has developed its own structurally embedded form of transaction suppression.
- Singapore’s Housing Market: Structural Architecture
2.1 The Dual Housing System
Singapore operates a dual-tier housing system unlike any other major economy. As of 2024, 77.4% of resident households reside in HDB flats, with the remainder in private condominiums, executive condominiums (ECs), or landed property. This high public housing share is not merely a legacy feature—it is an active policy instrument. HDB flats are deeply subsidised at point of sale (BTO), subject to resale restrictions, and governed by the Minimum Occupation Period (MOP): a mandatory five-year holding period before a flat may be sold on the resale market or rented out entirely.
This architecture creates a structured cadence of supply release that has no parallel in the U.S. context. The pipeline of MOP-reaching flats, effectively a scheduled release valve for resale supply, is the primary structural mechanism through which the government can modulate resale market conditions without direct price intervention.
2.2 Mortgage Structure: Why Singapore Has No Rate Lock-In
Singapore’s mortgage market is dominated by floating-rate instruments indexed to the Singapore Overnight Rate Average (SORA). Unlike the U.S. 30-year fixed-rate mortgage, which creates a powerful financial incentive to hold and never refinance, Singapore’s variable-rate structure means borrowers have no particular financial disincentive to transact. Indeed, with SORA declining to approximately 1.25% by late 2025 and banks offering fixed-rate products below 2.5%, the interest rate environment was actively supportive of transactions heading into 2026.
This is a critical structural divergence from the U.S. case. The absence of a rate lock-in does not mean Singapore’s market is free from transaction suppression—but the mechanism of suppression is different in origin.
Feature United States Singapore
Primary mortgage type 30-year fixed rate Floating rate (SORA-indexed)
Rate lock-in effect Strong (3% vs. 7% disparity) Absent (variable rate)
Public housing share ~1–2% (social housing) ~77% of households (HDB)
Key turnover constraint Mortgage rate differential MOP, replacement cost, ABSD
Turnover mechanism Market-driven Policy-scheduled (MOP pipeline)
Primary affordability gauge Price-to-income ratio MSR / TDSR + CPF utilisation
2025 turnover trend 30-year low (<2.9%) HDB resale volume down ~11% YoY (Q3)
Price trend 2025 Elevated and sticky Moderating: HDB +2.9%, Condo +3.4%
Table 1: Comparative Housing Market Characteristics — U.S. vs. Singapore (2025)
- Singapore’s Equivalent Constraints: An Analytical Framework
3.1 The MOP as a Structural Turnover Regulator
While Singapore does not face a mortgage rate lock-in, it faces an institutionally constructed analog: the Minimum Occupation Period. The MOP effectively removes a significant share of the housing stock from the resale market for five years post-occupation. During periods of high BTO activity—as occurred in 2019–2021—the MOP pipeline creates a lag before supply reaches the resale market. The relative shortage of MOP-eligible flats was a primary driver of the HDB resale price surge between 2020 and 2024, which cumulatively exceeded 44%.
In 2025, only approximately 8,000 flats reached MOP, insufficient to substantially ease resale market tightness. The consequence was a constrained resale supply alongside continued price appreciation, albeit at a moderated rate. By contrast, 2026 is forecast to see approximately 13,400 flats reach MOP—a near-doubling—which is expected to materially increase resale supply and dampen price growth to the 0–2% annual range.
3.2 The Replacement Cost Problem
A second mechanism suppressing transactions in Singapore parallels the U.S. dynamic more directly. In the U.S., homeowners reluctant to give up a 3% mortgage face a financial disincentive to sell. In Singapore, HDB flat owners who might wish to transact face a different but functionally analogous constraint: the cost of securing a replacement property.
After the 44% cumulative rise in HDB resale prices from 2020 to 2024 and continued private property price appreciation, many potential sellers find that upgrading to a larger HDB flat or private property requires a quantum leap in financial commitment. Agents consistently report sellers’ concern about replacement affordability as a primary impediment to listing decisions. This creates a self-reinforcing transaction freeze that is conceptually analogous to the U.S. rate lock.
3.3 The ABSD Barrier and the Upgrade Pathway
Singapore’s Additional Buyer’s Stamp Duty (ABSD) constitutes a significant transaction tax that disproportionately affects the upgrade pathway. For Singapore citizens purchasing a second residential property, ABSD currently stands at 20%; for permanent residents, the rate is higher. This fiscal friction discourages the formation of investment property portfolios but also complicates natural household lifecycle transitions—particularly for households that have outgrown their first HDB flat and seek a private condominium without first selling.
The 15-month wait-out period introduced in 2022, requiring ex-private property owners who sell to wait before buying HDB resale, further complicates the upgrade-and-downgrade cycle, though it has partially been offset by supporting demand from this group for HDB resale units once the period expires.
3.4 Middle-Income Affordability Compression
A structurally significant affordability gap has emerged for households earning S$14,000–S$20,000 monthly—too wealthy for standard BTO subsidies but increasingly priced out of private property. The median multiple for Singapore’s private market at approximately 13–14x annual income (per DBS Research, using a longer time series) reflects structural compression even as the HDB segment remains more accessible at a median multiple of 4.2x. This “missing middle” dynamic mirrors concerns in global gateway cities and exerts upward pressure on HDB resale flats as a substitute.
Constraint Type U.S. Mechanism Singapore Equivalent Severity (SG)
Financial disincentive to sell Low mortgage rate foregone upon sale Replacement property cost escalation High
Structural supply delay Inventory shortage from rate lock MOP pipeline lag Moderate–High
Transaction cost friction Realtor commissions (~5–6%) ABSD (20%+ for 2nd property) High
Income-affordability mismatch Price-to-income at historic highs Middle-income gap (S$14k–S$20k) High
First-buyer access restriction Elevated entry prices, high rates BTO oversubscription, resale premiums Moderate
Renovation/improvement deferral Homeowners await relocation Less pronounced (MOP owners improve) Low
Table 2: Transaction Suppression Mechanisms — Comparative Framework
- Market Context and Data: Singapore 2025
4.1 HDB Resale Market
The HDB Resale Price Index (RPI) rose by 2.9% in the first nine months of 2025, a significant deceleration from the 6.9% increase over the same period in 2024. The full-year price growth was projected at 3–6% by ERA Research, representing the slowest annual growth since 2019. Transaction volumes declined notably: total HDB resale applications for 2025 were forecast at 24,000–25,000, down from 28,986 in 2024. In Q3 2025, resale volume was 11.3% lower year-on-year.
Simultaneously, the million-dollar HDB flat phenomenon intensified paradoxically against a backdrop of overall price moderation. A record 1,598 such transactions were recorded in 2025—more than 500 above the 2024 record—reflecting continued strength in premium resale locations even as the median market cooled. The highest transaction recorded was S$1.56 million for a 5-room flat at Pinnacle@Duxton.
4.2 Private Residential Market
Private property prices rose 3.4% in 2025, with condo resale prices increasing 3.9% overall, though with marked regional divergence. New private home sales surged, with 2025 total volume representing the highest since 2021, driven by a strong pipeline of 24 new launches delivering over 11,000 units. Sub-sale activity declined from 2023–2024 peaks but remained above historical averages.
A structural concern is private property completions: only 5,249 units were completed in 2025 (down from 8,460 in 2024), creating a tight supply floor that prevented price correction despite cooling demand. The pipeline for 2026 is approximately 7,600 completions—a recovery but still below replacement-demand levels.
4.3 Interest Rate Environment
Singapore’s SORA declined to approximately 1.25% by November 2025, with banks offering fixed-rate mortgages at 1.55–2.40% depending on product and lock-in period. This represents a material reduction from 2023–2024 peaks and is supportive of housing demand. Projections suggest SORA could decline further toward 1.00% in 2026. Critically, unlike the U.S. dynamic where lower rates primarily benefit existing holders of high-rate mortgages, in Singapore lower rates directly stimulate new transaction activity and improve serviceability for both buyers and refinancing borrowers.
4.4 Affordability Metrics
The price-to-income ratio for HDB flats sits at approximately 4.2x (median multiple), placing Singapore in the “seriously unaffordable” category by Demographia’s international classification, though this remains considerably lower than Hong Kong (14.4x). For private property, DBS Research’s longer-term analysis identifies the average price-to-income ratio at 13.4x between 2000 and 2023, with recent years exhibiting further compression. Median household income reached S$12,446 monthly in 2025, rising 7.7% nominally—a healthy buffer that, given income growth outpacing price growth, contributed to modest affordability improvement.
Indicator 2023 2024 2025 (Full Year Est.) 2026 Forecast
HDB RPI growth (annual) +4.9% +9.7% +3–6% +0–3%
HDB resale volume (units) ~26,000 28,986 ~24,500 ~25,000
Condo resale price growth +3.0% +3.4% +3.9% +2–4%
Million-dollar HDB flats ~500 1,035 1,598 ~1,500–1,800
MOP flats reaching market ~7,500 ~8,000 ~8,000 ~13,400
SORA (year-end approx.) ~3.7% ~3.0% ~1.25% ~0.8–1.0%
Fixed mortgage rate (best) ~3.8% ~2.8% ~2.0% ~1.8–2.2%
Median household income S$11,516 S$11,994 S$12,446 ~S$13,000
Table 3: Singapore Housing Market Key Indicators 2023–2026 (Sources: HDB, URA, ERA, PropNex, SRX, DBS Research, MAS)
- 2026 Outlook: A Cautiously Improving Trajectory
5.1 Supply Dynamics
The single most significant structural shift in 2026 is the near-doubling of flats reaching MOP: approximately 13,400 units, up from roughly 8,000 in 2025. Key precincts contributing to this supply wave include Northshore Drive in Punggol, Margaret Drive in Queenstown, and Bidadari Park Drive in Toa Payoh. This pipeline increase represents the most direct policy-induced mechanism for moderating resale price growth and improving first-time buyer access.
Concurrently, the H1 2026 Government Land Sales (GLS) programme is the largest since 2017, potentially yielding approximately 11,000 homes across the planning horizon. With 65% of 2026 new private launches concentrated in the Outside Central Region (OCR), the pipeline is better aligned with the affordability band of HDB upgraders, who typically target quantum in the S$1.6–2.1 million range.
5.2 Demand Drivers
Demand in 2026 will be supported by several concurrent factors. Falling mortgage rates reduce the carry cost of ownership and bring marginal buyers into the market. New household formation continues at approximately 20,000 annually, providing a structural baseline. The large cohort of BTO owners whose flats reached MOP in 2025 carries significant embedded equity gains—those in mature estates who purchased in 2018–2020 at substantially lower prices stand to realise substantial capital gains upon sale, creating a financially empowered upgrader pool.
Permanent residents and former private property owners who have completed the 15-month wait-out period will continue to provide support for the HDB resale segment, particularly in the mid-to-upper price tier.
5.3 Risks and Headwinds
The primary downside risks are macroeconomic rather than housing-specific. Singapore’s export-oriented economy is highly sensitive to global trade conditions; the escalation of U.S. tariff policy under the 47th administration introduced material uncertainty into the growth outlook for 2026. The construction sector, which underpins the BTO pipeline, faces continued cost pressures. Additionally, the affordability gap for middle-income households remains structurally unresolved, and absent income ceiling adjustments to BTO eligibility criteria, this segment may continue to exert upward pressure on resale flat prices as a substitute.
The January 2026 SRX flash data showed HDB resale prices rebounding 1.2% month-on-month after the Q4 2025 moderation, with volumes rising 15.1% from December 2025—suggesting underlying demand remains robust and the feared market softening may be more gradual than anticipated.
- Government Policy Solutions
Singapore’s policy toolkit for housing affordability is among the most developed globally, combining supply-side scheduling, demand-side targeting, and fiscal disincentives for speculation. The following represents an analytical review of current and prospective interventions.
6.1 Supply-Side Measures
6.1.1 BTO Supply Surge
HDB launched 29,975 new flats in 2025 (BTO and SBF combined), a 41.2% increase from 2024. The February 2025 Sales of Balance Flat (SBF) exercise, at 5,590 units, was the largest on record. This supply surge directly addresses the MOP pipeline gap and will progressively ease resale market tightness from 2026 onwards. The policy signal is deliberate: Budget 2026 notably omitted prominent housing affordability messaging, suggesting the government regards the crisis-phase of supply shortfall as largely resolved.
6.1.2 Standard / Plus / Prime Classification Reform
Implemented from October 2024, the new HDB flat classification replaces the legacy mature/non-mature binary with a locational and amenity-based taxonomy. Standard, Plus, and Prime flats carry progressively higher resale restrictions and subsidy clawback rates (up to 14% for Prime flats in the most desirable locations). This framework allows HDB to continue delivering flats in prime locations—including new precincts such as Berlayar Estate in Bukit Merah and the Greater Southern Waterfront—while preventing disproportionate capital gains that would undermine the social housing mandate.
6.1.3 GLS Programme Expansion
The H1 2026 GLS programme, the largest since 2017, provides a direct mechanism to increase private housing supply, reduce developer land scarcity premiums, and moderate new launch pricing over the medium term. The concentration of supply in OCR locations targets the most affordability-sensitive buyer segment.
6.2 Demand-Side Measures
6.2.1 Enhanced CPF Housing Grants
CPF Housing Grants for eligible first-time buyers have been enhanced to S$120,000 for households earning below S$9,000 monthly. This directly reduces the cash outlay and effective transaction price for the lower-income segment. Grant eligibility and quantum adjustments are the primary lever for improving first-buyer access without direct price intervention.
6.2.2 Shorter-Wait BTO Options
Approximately 4,000 shorter-waiting-time flats are to be introduced annually, reducing the 3–5 year typical BTO wait. This reduces the demand overhang on the resale market from buyers who cannot wait, thereby moderating resale price premiums for immediate-occupancy units.
6.2.3 Income Ceiling Review
The BTO income ceiling for couples (currently S$14,000 monthly) and the minimum age for singles (35 years) are under policy review. Raising the income ceiling would expand BTO eligibility to middle-income households currently priced into the more expensive resale or private market—a potentially significant affordability intervention. Failure to adjust the ceiling in an environment of rising household incomes effectively tightens real access over time.
6.3 Cooling and Anti-Speculation Measures
6.3.1 ABSD Architecture
The current ABSD structure—with citizens paying 20% for a second property and 30% for a third—effectively suppresses speculative investment demand and channels aspiration toward owner-occupation. While this reduces transaction velocity in absolute terms, it supports price stability and prevents the leveraged property investment cycles characteristic of less regulated Asian markets.
6.3.2 Strengthened Seller’s Stamp Duty (SSD)
Strengthened SSD requirements introduced in July 2025, with extended holding periods and higher rates for short-term disposals, have reduced sub-sale activity and discouraged speculative flipping. This has contributed to the moderation in condo resale sub-sale volumes observed in 2025.
6.3.3 LTV Ratio Adjustment
In August 2024, the maximum LTV ratio for HDB resale flat buyers was reduced from 80% to 75%, increasing required downpayments. This macro-prudential measure reduces leverage in the segment most susceptible to affordability stress and limits systemic risk, though it modestly increases the upfront capital requirement for buyers.
- Economic and Social Impact Analysis
7.1 Household Wealth Effects
Housing wealth constitutes the dominant component of household net worth for most Singaporeans, given the high homeownership rate and the CPF framework that channels retirement savings into property equity. The post-2020 surge in HDB resale prices has generated substantial paper wealth for existing homeowners—flats purchased in 2018–2020 in mature estates have in many cases doubled in value by 2025. For the existing cohort of MOP-eligible owners, this represents a significant positive wealth effect.
The distributional consequences, however, are highly asymmetric. First-time buyers and younger households entering the market after 2022 face materially higher entry prices, longer wait times for BTO, and a wider gap to the upgrade path. This intergenerational dimension of housing affordability poses a structural challenge to social equity and the meritocratic compact central to Singapore’s developmental model.
7.2 Labour Market Mobility
Unlike the U.S. context, where housing lock-in directly impairs geographic labour market mobility (homeowners reluctant to sell cannot easily relocate for work), Singapore’s compact geography means spatial labour market friction is minimal. However, the financial weight of housing costs—particularly for younger households servicing mortgages on inflated resale prices—reduces disposable income, affects savings rates, and may defer household formation decisions. A sustained period of high housing cost-to-income ratios is associated in the literature with fertility decline, a concern particularly salient in Singapore’s demographic context.
7.3 Consumer Spending and the Home Improvement Market
The Home Depot parallel is instructive even if imperfect. Singapore’s home improvement and renovation market does not exhibit the same “repair vs. replacement” dynamic as the U.S., largely because HDB owners in the MOP period are active renovators by necessity (new flats are delivered in basic-finish condition). However, the transaction moderation does dampen renovation activity at the point of resale—which typically triggers a renovation cycle—reducing activity in the renovation, furniture, and home goods retail sector. Companies such as IKEA, Harvey Norman, and major renovation contractors see correlation with resale transaction volumes.
7.4 Financial System Stability
Singapore’s macroprudential framework—TDSR (Total Debt Servicing Ratio at 55%), Mortgage Servicing Ratio (MSR at 30% of income for HDB loans), LTV limits, and stress-test rates of approximately 4%—provides substantial insulation against the systemic risk scenarios that have characterised U.S. and European housing busts. The residential mortgage-to-GDP ratio, at 30.9% in 2024 and declining from 45.3% a decade prior, suggests a deleveraging trend that further reduces systemic vulnerability. The absence of subprime lending, widespread mortgage securitisation, or rate-reset risk means Singapore’s housing market poses limited systemic financial risk even under adverse scenarios.
- Policy Recommendations
Drawing from the comparative analysis, the following policy recommendations are advanced for consideration:
Recommendation 1: Accelerate BTO Income Ceiling Review
The failure to adjust the S$14,000 income ceiling for BTO eligibility in real terms constitutes a de facto tightening of access as median household income rises. A phased upward adjustment to S$16,000–S$18,000 would extend the public housing safety net to the middle-income cohort currently most exposed to resale and private market pressures, without undermining the subsidy targeting rationale.
Recommendation 2: Introduce a Differential MOP Waiver Mechanism
A means-tested or circumstance-specific MOP waiver—permitting early disposal in cases of documented hardship, employment relocation, or household composition change—would reduce transaction suppression at the margin without broadly undermining the MOP’s supply-scheduling function. This acknowledges that the five-year lock is not universally appropriate and that a rigid rule incurs real welfare costs in edge cases.
Recommendation 3: Progressive ABSD Reform for Upgraders
A targeted reduction in ABSD for Singaporean households upgrading from HDB to private ownership—subject to simultaneous sale of the HDB flat—would reduce the financial friction in the upgrade path for middle-income households. This preserves ABSD’s anti-speculation function while improving the efficiency of natural lifecycle housing transitions.
Recommendation 4: Enhanced Disclosure of MOP Pipeline Data
Systematic publication of projected MOP-reaching volumes by estate and quarter would improve market information efficiency, enabling buyers, sellers, and developers to make better-informed decisions and reducing the risk of price overshooting in supply-constrained micro-markets.
Recommendation 5: Sustained GLS Supply in Affordable Segments
The current OCR-weighted GLS pipeline should be sustained beyond 2026 to provide a durable counterweight to the affordability pressures in the upgrade market. Specific attention should be given to ensuring adequate supply in the S$1.5–2.0 million quantum band where HDB upgrader demand is concentrated.
- Conclusion
The U.S. housing market’s 30-year turnover low in 2025 provides a useful, if imperfect, lens through which to examine Singapore’s own structural constraints. Where the U.S. faces a financially-induced lock-in rooted in the fixed-rate mortgage architecture, Singapore faces a policy-structured turnover cadence rooted in the MOP, complicated by escalating replacement costs, ABSD friction, and middle-income affordability compression.
Singapore’s institutional architecture—the HDB framework, comprehensive cooling measures, and macroprudential lending standards—provides far greater policy agency than is available in the more marketised U.S. system. The moderation of HDB resale price growth to 2.9% in the first nine months of 2025, achieved without a market crash, and the incoming supply wave of MOP-eligible flats in 2026, suggest the policy framework is functioning broadly as intended.
The more pressing challenge is distributional: whether the housing system can continue to deliver affordability, social mobility, and wealth-building access to younger and middle-income households in an environment of persistently elevated asset prices. The answer will depend materially on the willingness to reform eligibility parameters, continue supply investment in accessible price bands, and reduce friction in the upgrade pathway—measures that are technically feasible within Singapore’s policy architecture and which deserve sustained analytical attention.
References and Data Sources
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URA Private Property Price Index: Q3 2025 Statistics. Urban Redevelopment Authority, Singapore.
Singapore’s Housing Market: 2025 Review & 2026 Outlook. 99.co Research, February 2026.
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ERA Singapore HDB Market Research: 2025 Annual Review. ERA Singapore Property Research, December 2025.
PropNex Market Commentary: Q3 2025 Housing Stabilisation Report. PropNex Realty.
Singapore Property Outlook 2025. DBS Research, The Business Times.
SRX Property Price Index: January 2026 Flash Estimates. SRX Singapore, February 2026.
2025 Year-End Review of the Singapore Property Market. Stacked Homes, December 2025.
Demographia International Housing Affordability: 2025 Edition. Urban Reform Institute.
Home Depot Q4 2025 Earnings Call Transcript. The Home Depot Inc., February 2026.
Will 2026 Be the Year the Housing Market Comes Alive? Laidley, C. Investopedia, February 24, 2026.