* Robust local demand for housing likely to keep prices firm
* Hong Kong seen announcing land supply steps on Wednesday
* Previous steps had short-term effect but prices still rose
By Kevin Lim and Anne Marie Roantree
SINGAPORE/HONG KONG, Jan 16 Singapore and Hong
Kong now have identical 15 percent levies to slow the foreign
money that has added fuel to their overheated property markets -
measures that will help first-time buyers but throw the
spotlight on investors' next targets.
The curbs on residential real estate purchases could shift
demand to retail and industrial spaces, diverting billions of
dollars to those sectors as well as to housing markets in the
United States, Canada, Australia and Malaysia.
Even if the pace of buying slows, analysts said, the
appetite for homes in Hong Kong and Singapore is so strong that
prices are expected to stay firm or ease only marginally.
"Singapore is like the London of Asia. Many people are not
here to flip their properties or sell out in two to three
years," said Knight Frank's head of consultancy and research Png
Poh Soon. "There are lots of non-monetary reasons for buying
Singapore and also Hong Kong property."
The two Asian cities are fierce rivals as financial and
wealth centres but share the issues of strong demand, limited
space and low mortgage rates that have driven housing prices
beyond the reach of many locals.
Shallow capital markets, a cultural tendency towards
property as an investment and concerns among mainland Chinese
buyers about their home market have also played their parts.
After targeting speculators with previous steps, Singapore
moved last week to discourage investors by slapping a stamp duty
on locals buying a second home, an attempt to keep prices
affordable for most first-time buyers.
In Singapore and Hong Kong, which brought in similar
measures in October, both governments want to cool but not
collapse the market and avoid driving investment elsewhere.
NEW STEPS IN HONG KONG
Hong Kong's embattled leader Leung Chun-ying is expected to
announce new measures to increase land supply when he delivers
his maiden policy address on Wednesday. In power for less than a
year, the former property surveyor is under mounting pressure to
step down over an illegal construction scandal.
Still, Leung is likely to shy away from further tightening
while he gauges the impact of previous steps to rein in prices
in one of the world's costliest property markets.
Those moves, including a 15 percent tax on foreign buyers,
had a big impact on sales in November and December, when some
agents reported a drop of more than 40 percent in transactions.
As Hong Kong felt the squeeze, private home sales in
Singapore jumped nearly 30 percent in December from November.
Prices in Singapore rose 1.8 percent in the fourth quarter
from the previous three months and have soared almost 60 percent
to record highs since mid-2009 despite the government's repeated
attempts to subdue them.
Hong Kong's transaction volumes have recovered in January
and the duration of the measures' impact is getting shorter each
time, said Wong Leung Sing of Centaline Property.
"It's like using a miracle drug," he said. "The first time
it is very effective. The second time its effectiveness is
largely decreased. The third time there might be no effect at
LOCAL DEMAND STILL STRONG
Hong Kong's government is ready to step in on the demand
side if prices keep rising.
"Those demand-side measures will be largely focused on the
two tax structures," said Andrew Lawrence, head of Hong Kong
property research at Barclays Capital, referring to stamp duty
and a levy on foreign buyers.
Already there is evidence of more Asians buying properties
in Australia, the United States, Canada and Britain, he said.
Citigroup estimated 90 percent of recent transactions in
Hong Kong were by people intending to live in the properties.
That contrasts with 2010, when an estimated 50 percent were
end-users, 20 percent speculators, 20 percent long-term
investors and 10 percent non-local buyers.
The steps Singapore took on Friday included a higher stamp
duty of 15 percent for foreign buyers, a new levy on sellers of
industrial property and a limit on loan sizes.
Overseas buyers had already started to look away from
Singapore after its previous round of cooling measures. As a
percentage of home sales, buying by foreigners in Singapore
dropped to just over 6 percent last year from 18 percent in
2011, Citigroup said in a report.
The bank said it expects "foreigner participation to
moderate slightly" since the Singapore stamp duty was aligned
with Hong Kong.
Despite the drop in foreign demand, private home sales in
Singapore rose to 24,568 last year from 21,097 in 2011.
Investors who stop buying apartments and houses are almost
certain to seek other assets.
Data from CBRE shows industrial properties in Singapore
offer a net yield of 4.3 percent and prime retail properties
offer 4.6 percent. Banks now pay around 0.1 percent interest on
Singapore dollar savings accounts.
"One thing we can be sure of," said Joseph Tan, executive
director of residential at CBRE. "Because interest rates are so
low, the money will not be sitting in the bank for too long."
(Writing by John O'Callaghan in SINGAPORE; Additional reporting
by Grace Li in HONG KONG; Editing by Daniel Magnowski)