Knight Frank: S’pore prime home prices to increase 2%

The recent hike in Hong Kong’s stamp duty may divert home buying interest to Singapore. (Photo: William Cho, Wikimedia Commons)

Prime residential prices in Singapore are expected to increase by two percent in 2017, according to property consultancy Knight Frank and reported the Financial Times.

This comes as the recent hike in Hong Kong’s stamp duty may divert home buying interest to the city-state.

“With strong economic fundamentals and a stable political climate, Singapore is expected to retain its status as a haven investment destination for both individual and institutional global investors,” said Liam Bailey, Knight Frank’s Global Research Head.

Prime residential prices are expected to hold firm in London, New York and Hong Kong, while Sydney and Paris are expected to post five percent and two percent growth, respectively.

Miami, on the other hand, will see prime residential prices drop by five percent.

Bailey believes the most important factor affecting the prime property market this year will be their domestic economic performance. There will also be a shift in the cost of money and currency, with a gradual transition from record low interest rates to be led by the US.

“The strength of the dollar is also expected to encourage dollar-pegged investors to consider UK or European investment options,” he said.

Bailey noted that tax has also emerged as a growing influence on market performance. In fact, a number of rules targeted at controlling the destination of investment flows have been introduced over the last 12 months.

Australia, for instance, saw three states – Queensland, New South Wales and Victoria – roll out a stamp duty surcharge for foreign home buyers. This is on top of a new 10 percent withholding tax on the sale of high-end Australian property by foreign residents.

Meanwhile, New Zealand introduced a capital gains tax for short-term property investments, while the UK and Vancouver implemented an additional rate of stamp duty on luxury property purchases and an empty-homes tax, respectively.

“Clearly the expansion of so-called cooling measures to control international wealth flows into property shows no sign of easing,” said Bailey.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg