Singapore’s property market is facing the possibility of new government-imposed cooling measures as housing prices continue to rise, driven in part by speculative buying. According to a recent Morgan Stanley report, the housing market rally is expected to extend into early 2025, fueled by investors eager to buy and sell properties before their completion. This trend is increasing the likelihood of the government implementing additional curbs to stabilize the market.
Morgan Stanley analysts, led by Wilson Ng, suggest that the combination of speculative buying and an influx of new housing supply could result in a 5% decrease in property prices this year. The investment bank is among several analysts predicting further government intervention, especially as Singapore’s ruling party prepares for an election year, with housing affordability being a significant concern for voters.
Recent data shows that Singapore’s private residential prices rose by 2.3% in the last quarter, marking the highest quarterly increase in a year. Financial institutions like Citigroup and Barclays have also cautioned about potential new curbs. If implemented, these measures are likely to focus on increasing seller stamp duties rather than targeting buyers, as this approach could more effectively curb speculative buying.
Morgan Stanley notes that speculative buyers have been achieving an average profit of 21% from 2023 to 2024, surpassing historical averages and likely contributing to increased demand. The Singapore government has already introduced three rounds of cooling measures in recent years, including a significant increase in stamp duty for foreign buyers in 2023.
Despite Morgan Stanley’s previous bearish outlook, which forecasted a 3% decline in private home prices for 2024, prices actually rose by 3.9% last year. As the market continues to evolve, further policy adjustments may be necessary to address both housing affordability and broader demographic challenges, such as Singapore’s declining birth rate.
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