Property prices are predicted to rise in Singapore, thanks to a stamp duty increase in Hong Hong.

In November Hong Kong increased its stamp duty rate to 30% for foreigners – a decision that could actually have a positive effect on the property market in Singapore.

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The island city-state has a stamp duty rate of 18% for overseas buyers, making it a far more attractive proposition to foreign investors than Hong Kong. “The fallout from the stamp duty could be beneficial for Singapore,” commented Sigrid Zialcita, MD for Asia Pacific research at Cushman & Wakefield. “Singapore is always seen as a place where you can preserve capital and we are expecting interest from foreign nationals to come back.”

The news was particularly well received since Singapore’s property prices have been declining for the past three years. But as the 18% stamp duty rate could attract more foreign buyers – especially from mainland China, which is currently witnessing a weakening of the yuan – Savills is now forecasting that prices will actually increase by 1% on average during 2017. This will come as a welcome respite since they have fallen a total of 11% since 2013.

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The forecast for Hong Kong is less optimistic however, with prices in the secondary-housing market dropping 8% according to industry averages. It is possible though that new-build properties will buck the trend. While figures aren’t yet available for the new-build residential sector in Hong Kong, early signals are that prices in this industry will be more hardy as developers offer incentive packages in order to offset the higher stamp duty rate.