(Bloomberg) -- A spike in housing prices, partly brought on by speculative buying, could prompt the government to issue more cooling measures, according to a Morgan Stanley research report.
Singapore’s housing rally will spill into early 2025, underpinned by investors looking to buy and cash out before the apartments are completed, analysts led by Wilson Ng wrote in a Jan. 6 report.
That’s increasing the chances of the government rolling out more curbs to cool the market. Combined with an influx of supply, it could lead to a 5% drop in prices this year, the analysts said in a separate report.
The investment bank joins a growing chorus of analysts expecting more government action. The city-state’s ruling party is gearing up for an election year, at a time when housing affordability has been a major concern for voters.
Singapore’s private residential prices jumped 2.3%, the most in a year on a quarterly basis, according to preliminary estimates released last week. Citigroup Inc. and Barclays Plc are among banks that have warned of potential curbs.
If rolled out, the new policies “will more likely involve raising seller stamp duties” instead of focusing on buyers, analysts led by Ng wrote, adding that such moves would be more effective at nipping speculative buying.
Morgan Stanley said buyers who flip units were getting an average 21% in profit in 2023 to 2024, higher than historical levels in preceding years, which likely added to demand.
Singapore has introduced three rounds of private property cooling measures in recent years. Most recently in 2023, it doubled the stamp duty for most foreign buyers to 60%. A seller’s stamp duty typically applies to residential properties being sold within three years.
Morgan Stanley has been one of the most bearish on Singapore’s property market. It forecast a 3% decline in private home prices in 2024 and subsequently revised it to no change. Prices eventually rose 3.9% last year based on preliminary estimates.
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