Morgan Stanley: Singapore housing price spike could prompt new cooling measures

SINGAPORE: Singapore’s housing price spike, partly due to speculative buying, could lead the government to introduce new cooling measures, according to a report from Morgan Stanley.

In a Jan 6 report, analyst Wilson Ng stated that Singapore’s housing market is expected to stay strong into early 2025, driven by investors purchasing properties to sell before completion.

This increases the likelihood of the government introducing additional measures to cool the market. With more homes becoming available, prices could fall by 5 per cent this year, according to Mr Ng in another report.

According to Bloomberg, this perspective follows other financial institutions like Citigroup and Barclays, which have also indicated that further curbs may be on the horizon. 

Flash estimates released last week show that private residential prices in Singapore jumped by 2.3 per cent on a quarterly basis, the highest increase in a year.

The city-state’s ruling party is preparing for an election year, with housing affordability being a key issue for voters.

If new measures are implemented, they are expected to focus on “raising seller stamp duties” rather than targeting buyers, said Mr Ng. He believes this move would be a more effective way to curb speculative buying.

The report noted that investors flipping properties between 2023 and 2024 have seen average profits of 21 per cent, much higher than in previous years, which has likely contributed to the rising demand.

Singapore has had three rounds of private property cooling measures in recent years. The city-state has doubled the stamp duty for most foreign buyers to 60 per cent in 2023. A seller’s stamp duty typically applies to homes sold within three years.

Morgan Stanley, known for its cautious view of Singapore’s property market, initially predicted a 3 per cent drop in home prices for 2024 but later revised it to no change. However, preliminary data showed prices rose by 3.9 per cent last year. /TISG

Read also: SG billionaire Kwek Leng Beng’s company to sell premium condos in next 2 weeks as housing market shows signs of recovery

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