Hong Kong housing troubles unlikely to impact Singapore

Cheyenne Hollis | Oct 31, 2012 | Comments 0

Housing problems in Hong Kong are unlikely to have an impact in Singapore.

The recent property cooling measures introduced in Hong Kong are unlikely to have an impact on Singapore property prices. Experts said foreign property investors would not switch their portfolio from Hong Kong to Singapore, Channel News Asiareported.

Besides being leading international financial centres, both Singapore and Hong Kong hold some of the world’s most expensive homes.

Hong Kong tops the list, according to research from real estate agency Savills, while Singapore, fourth on the list, continues to see private home prices soaring to new highs.

Both cities have introduced a series of cooling measures to dampen prices.

Hong Kong introduced its third set of measures in two months last week, requiring foreign buyers to pay 15 percent tax. This is more than Singapore’s Additional Buyer’s Stamp Duty of ten percent that was introduced in December 2011.

To cool its property market, Singapore has capped the home loan tenure, the sixth cooling measure in recent years. However, with high liquidity in the global market, analysts said new measures would be more frequent, with one to two measures a year being normal going forward.

“At the moment, the perception is that HK is trying to fight fire… At the same time, they are trying to fight the free market status,” Colin Tan, head of research at Chesterton Suntec International, said. “We have committed to supply as much as demand, whereas they have not yet said so.”

Still, market watchers forecast home prices in Singapore to increase.

“Developers will ultimately have to pass the land cost to the buyers. You have a case where land cost has risen by 15 to 30 plus percent over the past six months,” Alan Cheong, head of research at Savills Singapore, said. “Come next year, with land being about 60 percent of development cost, developers will probably have to raise prices by ten to 15 percent for certain areas, particularly in the suburbs.”

While Hong Kong and Singapore are considered safe havens for property investing, some analysts said investors could start look to second-tier Asian markets that have less government intervention.