Singapore property tops Hong Kong: UOB Kay Hian

By Romesh Navaratnarajah: Even with an expected 10 to 15 percent drop in sales volumes this year, Singapore's property market is still expected to perform better than rival Hong Kong because of three main reasons, noted UOB Kay Hian.

Firstly, Boston Consulting Group reported that Singapore has the world's highest number of millionaire households, with 17 percent of all households having at least US$1 million (S$1.25 million) in private wealth.

Singapore also has the world's fourth highest and is number one in Asia in terms of GDP per capita, at around US$59,711 (S$74,462) per person, exceeding Hong Kong's GDP per capita of about US$49,137 (S$61,284) per person.

"With a lack of better alternative investment vehicles in Singapore, we believe property will continue to remain a favoured investment asset class among rich Singaporeans," said UOB Kay Hian.

Secondly, the city-state's 89 percent home-ownership rate, compared to Hong Kong's 30 percent, enables the government to adjust policy measures in case of a sharp decline in prices.

"With the bulk of the population owning their own properties and staying in public housing, we believe the government's objective is to maintain stable property prices in line with the country's long-term GDP growth and not see a sharp decline in housing prices as this will adversely impact economic growth."

"Thus we believe the government can tweak policy measures to support property prices in case of a drastic price fall," UOB Kay Hian added.

Lastly, low unemployment levels and higher median monthly household income expansion will help drive long-term growth in the country.

"The extremely low interest rates and higher-than-expected wage growth in Singapore are likely to be the long-term demand drivers lending stability to the longer-term outlook of the country's property sector," said UOB Kay Hian. Related Stories: Landed homes continue to shine

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