Singapore a global role model in property cooling: Bloomberg

Other countries can’t handle their housing bubbles.

Singapore has lowered down housing prices by 3.7% over the past 12 months, as other cities like London, Manhattan and Sydney struggle to keep their housing prices from surging.

Bloomberg says that Singapore and Hong Kong did not even break a sweat as it reined in home prices by imposing measures including mortgage caps, taxes on property flippers, and levies on foreign buyers as high as 15%.

The report, however, says that the ease with which Singapore and Hong Kong cooled down their property market could be due to the cities’ island geographies, preponderance of public housing resulting in two-tier housing markets and citizens willing to tolerate government directives. London and New York have nowhere near the same level of control over their economies and the behavior of their residents.

Here’s more from Bloomberg:

Singapore and Hong Kong, as a special administrative region of China, have governments with policy-making power over their entire geographic areas, where they are relatively free of political opposition from neighborhood groups or borough councils that stymie directives or mitigate their effectiveness. The Asian cities control the land supply and are the biggest landlords.

That allows them to implement decisive policy measures. For example, in January 2013, the Monetary Authority of Singapore, effectively the central bank and chief regulator, cut the mortgage ratio allowable on purchases of second homes while more than doubling minimum down payments from 10 percent to 25 percent. The banks had no choice but to follow.

The dominance of the private sector in the housing markets of New York and London also leaves them with less leverage than their counterparts in Asia. More than 80 percent of Singapore residents live in government-built flats, according to the city’s Housing & Development Board.

Of those living in Singapore’s public housing, more than 90 percent own their apartments, the result of government policy promoting home ownership through a combination of cheap loans, housing grants and a program that allows buyers to use accumulated government pension contributions for purchases.

Public housing doesn’t carry a stigma in Singapore, where most is located in master-planned towns, with schools, sports and medical facilities in landscaped surroundings.