Cooling measures in Hong Kong and Singapore: what works, what doesn't

Contributor 25 Apr 2018


Governments in the two rival cities have poured icy water on their overheating housing markets, with contrasting results.

By Duncan Forgan

It would be fair to say that Singapore’s famously stringent cooling measures haven’t always made those inside the country’s real estate sector feel warm and fuzzy. 

But as the market in the Lion City displays signs of improving vitality while showing demonstrable value, fairness and sustainability – especially in comparison to regional rivals such as Hong Kong – there have been converts to the cooling measures cause.  

When the country’s government first started using a firmer hand to stabilise the market, property prices were escalating at a dramatic rate, rising by up to 60 percent between 2009 and 2013.

The government’s application of icy water on the overheating market through measures such as raising the rates for Additional Buyer’s Stamp Duty (ABSD) was strong and decisive – and resulted in home prices dropping for a record 15th quarter in June 2017. 

Despite pressure from developers and others who accuse the government of presiding over a sector that shows only very timid signs of life, cooling measures are likely to be in place for some time to come. 

In March this year, the Singapore government reduced stamp duty imposed on sellers and some mortgage restrictions. That helped stoke optimism that the country’s property market is rebounding, with home sales jumping and developers showing more aggression at land auctions. 

More: Inside one of Singapore’s strangest homes

Ravi Menon, managing director of the Monetary Authority of Singapore, however, quashed any notion that cooling measures were on their way out. “Mortgage rates are very low,” he says at the release of the bank’s annual report in June. “And the risk of a renewed unsustainable surge in property prices is not trivial.”

Indeed, few would argue that the government has not achieved what it set out to when it stepped in to apply some correction to the market.

“Despite the rolling out of tax-based and other restrictive policies by various governments in other countries to cool their housing markets, Singapore seems to be the only major market where prices are effectively contained,” says Christine Li, director and head of research at Cushman & Wakefield Singapore.

“As of 2016, Singapore’s housing price to income ratio of 4.8 is the lowest among the global “superstar” cities such as New York, London and Hong Kong – the latter has a ratio of 18.1 – thus making Singapore an attractive market in terms of value.”

“The cooling measures have been very successful,” adds Alex Shlaen, managing director at Panache Management, a luxury brands and investment advisor. “Probably even over-successful. The government dealt with a shortage of supply by adding significantly to the HDB (Housing Development Board) government-subsidised public housing. It was the luxury market which was the main target and the main victim. But the prices of luxury properties are now among the lowest in the world relative to similar top locations.”


The Singapore government’s attempts to cool the country’s property sector are widely viewed as being successful.

Yet while even the strongest critics of Singapore’s cooling measures at least acknowledge their efficacy, it’s a hugely different story in Hong Kong where attempts to restore sanity to an overheated market have largely failed. In the view of many experts, in fact, the demand suppression measures enacted by the Hong Kong Monetary Authority have only succeeded in making matters more problematic.

“They have failed to rein in property prices,” says Denis Ma, head of research for JLL Hong Kong. “And, in our opinion have made the situation worse by shutting down the secondary market.”

Housing prices in Hong Kong have increased by as much as 80 percent since the government started introducing cooling measures in late 2009. These include an array of stamp duty levies and reduced borrowing capacity in the form of lower LTV ratios and stress-tests of debt-servicing ratios. 

However, these measures have disproportionately affected buyers in the secondary market, notes Christopher Dillon, author of the real estate guide Landed Hong Kong.

“Developers now offer financing packages that are outside the Hong Kong Monetary Authority’s regulations,” he says. “These packages make new homes far more attractive than pre-owned ones. That’s crushed volumes in the secondary market.”

“Housing prices and volumes use to correlate well,” agrees Ma. “However, since the government introduced these measures, this relationship has been distorted; volumes down but prices up! 

“The biggest problems with the government’s measures is clearly that they’ve been ineffective and have locked out a lot of people from getting on the housing ladder. And for a lot of these people, it’s not necessarily that they don’t have the ability to service a mortgage. Rather it’s the significant increase in upfront transaction costs that sends them to the sidelines.”

Hong Kong’s cooling measures have also missed a key target. “Tighter mortgage regulations have little effect on cash buyers,” observes Dillon.

Cooling measures, by their very nature, are not intended to excite. They are specifically designed as a way of placing barriers in front of speculators and developers: hardly a sexy recipe. Nevertheless, if applied correctly and consistently, they can provide a necessary pressure valve. In Singapore, this valve seems to be having its intended impact. In Hong Kong, the apparatus appears too flimsy to handle the heat.


This article was originally published on For more stories from Asia’s most trusted and enduring luxury real estate, architecture and design publication, visit

joe Hazeldon
Apr 28, 2018
A good article but it's missing one key factor... it's not about the correct application of the cooling measures, it is HK's proximity to the increasingly wealthy Mainland that is a major difference to Sg, there are large numbers of foreign cash rich buyers, to whom large, up-front deposits are not an issue... it's not a case of "flimsy apparatus" - the cooling measures in both countries are very similar...
leon wang
Apr 25, 2018
Cooling measure is punishing the speculators and saving our banks

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