A tale of two cities: the effectiveness of macroprudential and regulatory policies in the housing markets – Singapore versus Hong Kong SAR

Purpose The purpose of this paper is to focus on the property markets in two global cities, Singapore and Hong Kong SAR (Hong Kong). This paper presents stylized facts about their respective housing markets, examines their experiences with macroprudential policies and related regulatory policies, such as stamp duties, and investigate how these policies affect house prices and price synchronicity. Design/methodology/approach Panel regression with regional variations for the two economies. Findings Panel regression results reveal that loan-to-value limits and additional buyer’s stamp duty can help insulate domestic property prices from global prices in Singapore but cannot directly dampen house price growth. While loan-to-value limits and stamp duty do not decouple house price synchronicity in Hong Kong, these policies contain domestic house price growth. Empirical evidence also suggests that land supply seems effective in stabilizing house price growth in Singapore, but it tends to accentuate the property cycle in Hong Kong. Originality/value While there are a few studies on the impact of macroprudential policies on property prices and transactions in the contexts of Singapore and Hong Kong, none have examined specifically house price synchronization. This paper focuses on Singapore and Hong Kong and models the effects of macroprudential policies and stamp-duty-based fiscal measures in reducing the house price synchronicity as well as their direct effects on residential property prices in two cities separately.