Morgan Stanley Says Singapore Home Speculation Could Lead to Fresh Cooling Measures

With prices for private homes in Singapore up 2.3 percent on a quarterly basis in the last three months of 2024, Morgan Stanley says new cooling measures could be on the horizon if speculative purchases continue to amplify sales.

Robust take-ups at the city-state’s new project launches are being driven by a growing number of “would-be sub-sellers”, or speculative investors looking to buy a unit then cash out ahead of the home’s physical completion, the investment banking giant said in a research report.

Sub-sale activity is rising and increasingly profitable, according to the report, with such deals averaging a 21 percent profit during 2023-24 against historical levels of 8 to 18 percent from 2016 to 2022. Sub-sales grew to 1,200 units a year during 2023-24, accounting for 7 percent of total transactions and tripling the 2016-22 levels of 400 units a year.

“We believe growing speculative buying activity at new launches has driven a spike in prices and could trigger fresh cooling measures,” said analysts at the Manhattan-based bank.

Past Is Prologue

Positive momentum in the housing market is likely to spill over into early 2025 after quarterly home price growth accelerated past 2 percent, according to Morgan Stanley.

The bank noted that each of the last three times quarterly home price growth in Singapore exceeded 3 percent – in December 2021, September 2022 and April 2023 – the government followed up by introducing new policies to curb price growth.

The most recent round of rules, which followed a 3.2 percent jump in home prices during the first quarter of 2023, saw the additional buyer’s stamp duty for non-resident foreigners buying a residential property hiked to 60 percent from 30 percent. Rates for home purchases made via entities and trusts were raised to 65 percent from 35 percent.

“New cooling measures will need to deter a growing pool of speculative buyers in order to be successful, in our view,” Morgan Stanley said, adding that any new measures would likelier involve raising seller’s stamp duties than hiking buyer’s stamp duties.

Sales Spike

Singapore fourth quarter upswing in home prices was backed by a 25 percent spike in private home purchases after an 11 percent quarterly decline in the previous three months. The bounceback marked the only quarterly rise in housing deals of 2024, according to the Urban Redevelopment Authority.

Analysts at property consultancies attributed the rebound in pricing and deal volume in the most recent quarter to declining interest rates and a recovering stock market.

“As interest rates started to fall with the US Federal Reserve announcing a 50-basis-point cut in September 2024 followed by 25-basis-point reductions in November and December, homebuyer activity in the new sales market swelled significantly in October and November 2024,” said Leonard Tay, head of research at Knight Frank Singapore.

According to Cushman & Wakefield, there were a total of 22 new launches — excluding the hybrid public-private executive condo segment — in 2024, with a total stock of 6,302 units. Some 57 percent of those projects were launched in the fourth quarter.

In 2025’s first major project launch, 8,000 visitors descended on The Orie sales gallery in north-central Singapore over the weekend to get a preview of the 777-unit joint development of CDL, Frasers Property and Sekisui House.

“Apart from being amongst the first residential launches in 2025, The Orie is also the first private residential launch in Toa Payoh since 2016,” said a representative for the consortium. “We are heartened by the enthusiastic interest, which reflects the attractiveness of homes in established residential estates.”