Singapore prime property prices has fallen 4.5 per cent in 2011

It is not a secret; Singapore luxury property segment is not doing very well currently. Many luxury projects have a large number of unsold units and as more are completed this empty flat stock is increasing. In 2011  prices in this segment has fallen 4.5 per cent year-on-year from Q3 2010 to Q3 2011. And this was even before the 10 % Additional Buyer’s Stamp Duty (ABSD) introduced by Singapore Government as a cooling measure in December 2011. This cooling measure basically adds 10% more to the already 3% Buyer’s Stamp Duty for non-resident (PR) foreign property buyers in Singapore. This group of buyers is very important for the prime market in Singapore since they provided nearly half of the demand for luxury property.

Actually the prices are falling in some prime destinations of Asia following the huge booms recorded over the past few years according to The Wealth Report 2012 released by global property consultancy Knight Frank. One giant source of capital flow into prime property is China which is creating funds out of thin air like major economies of the world to delay the pain of financial crisis of 2008 to the future. This created money is then flowing into property (typical resource misallocation created by money printing). Chinese government, which is fuelling the fire in the first place, is also trying to extinguish it at the same time by several cooling measures. Unsurprisingly, the attempt to control prices inChina has seen investors switch their focus to commercial property markets and also to the prime residential market in Hong Kong. Mainland Chinese buyers now make up 25% of prime market purchases in Hong Kong, where prime apartment prices rose by a further 4.6% in 2011, compounding the 60% growth seen since the beginning of 2009. This potential inflow compounded by fresh phantom money printing by European Central Bank has prompted the latest property cooling measure in Singapore which was announced days before this large European money printing machine was unleashed.

[1] - The Wealth Report 2012