Real estate markets in Singapore, Hong Kong go their separate ways — but for the better

By Alan Cheong / Savills Singapore | July 25, 2017 9:00 AM SGT
For the past two years, there has been less of a correlation between Hong Kong's and Singapore's office and residential prices (Singapore city pictured)
There is an adage that some still subscribe to — that the Singapore property market lags Hong Kong’s by about two quarters. While that could have been the case, it is also not entirely correct because insofar as office prices in HK dollars are concerned, since 2005, we have had only one instance in which prices in Hong Kong led those in Singapore by two quarters. That was in 1Q2009, when prices in Hong Kong started to rise six months before those in Singapore (see Chart 1).
The same is observed for the luxury non-landed private residential segment. Prices in Singapore and Hong Kong were positively correlated from 2000 to 4Q2014. Thereafter, prices in Hong Kong surged ahead while prices in Singapore went sideways (see Chart 2). Some may subscribe to the view that Singapore had put in place a string of macroprudential cooling measures that slowed market activity. However, Hong Kong, too, had put in place similar policies, and in November 2016 and April this year, the Special Administrative Region (SAR) added further property cooling measures, including raising the stamp duty on homebuyers to rein in prices.
For the past two years, there has been less of a correlation between Hong Kong’s and Singapore’s office and residential prices. Why is that?
Grade-A office sector
The reason Hong Kong office prices started to rise from mid-2014...