Singapore’s three-year decline in home prices could see relief from an unexpected quarter in 2017: Hong Kong.
So say analysts who expect the slide in the city-state's home prices to end this year as foreign investors turned off by Hong Kong's move to increase the stamp duty for overseas buyers look to Singapore instead.
One of them said that Singapore house prices are approaching their trough, with a forecast price move of flat to minus 2 per cent. Another forecasts Singapore prices to rise one per cent on average this year.
The fallout from the stamp duty could be beneficial for Singapore as Singapore is always seen as a place where you can preserve capital and interest from foreign nationals is expected to come back.
Hong Kong's November increase in stamp duty to 30 per cent for foreigners makes Singapore's 18 per cent rate more attractive to overseas buyers, particularly mainland Chinese who are seeking investments abroad to help shield them from a further weakening of the yuan.
That will help limit the decline in Singapore property values to about 1.5 per cent this year, according to the average estimate of five analysts surveyed by Bloomberg. Home prices have fallen 11 per cent since 2013, when the government implemented the strictest of its own cooling measures.
The outlook for Hong Kong is more bearish, with prices in the secondary-housing market seen dropping 8 per cent, according to the average of seven analyst forecasts. While figures for new homes aren't available for Hong Kong, early indications are that prices in this segment will be more resilient as developers offer incentives to offset higher stamp duties.
Adapted from: The Business Times, 20 January 2017