DAMPENED MARKET SENTIMENT
Spectators claimed that Singapore’s doubled property taxes have lessened foreign owners ‘ motivation to purchase residential properties.
As part of government policy stabilization measures, the ABSD for foreign buyers of residential homes was increased from 30 % to 60 % in April of last year.
This means that for a S$ 5 million house, buyers will have to pay about S$ 3 million in taxes.
” Traditionally, ( the luxury segment ) attracts a lot of foreign buyers. But since the introduction of the new ABSD last year, we saw the number of foreign buyers drop significantly”, said Professor Sing Tien Foo, Provost’s Chair Professor at the Department of Real Estate at the National University of Singapore’s ( NUS) Business School.
IMPACT ON OTHER Divisions
According to Prof. Sing, developers may decide to update their prices to attract more customers if demand continues to be weak, particularly those who are approaching the ABSD remission deadline. This might have an impact on different market segments.
The emergence of foreign buyers may also push up local need, he added.
” If the business sentiment continues to be poor, and physical conditions more questionable, therefore we perhaps will see this impact”, he said. ” Especially when the price gap narrows, this will probably attract ( more ) local buyers … with more choices such as better locations. This will affect how innovative launch are priced as well as how they are priced.
Since the second quarter of last year, Singaporeans have surpassed immigrants as the largest buyers of luxury properties.
A sales representative with experience in these sales reported to CNA that 80 % of inquiries today come from citizens, and more than half of those who sign up for a system do so.
” Singaporeans are buying homes for several reasons, including the need for home equity, upgrading, lengthy- word investments for funds gain, rental income or as a status symbol. Some parents purchase components to leave as a reputation for their children, according to real estate broker Jasmine Png.
Eager STILL FOREIGN DEMAND
According to industry watchers, overall home business costs are also rising, but at a slower rate.
According to Prof. Sing, ABSD is likely to persist. ” Any possible changes ( to the ABSD ) I think there will be further tightening, especially on the second home, especially for the investors”, he said.
” For nearby buyers, we continue to see active investment demand for this market, which is currently driving up these rates and driving up some of the costs, particularly in the area of jobs in the central place,” said one analyst.
Despite the ABSD, there are still outside investors engaged in the Singapore home market, mainly due to the strong Singapore currency and the city- state’s reputation as a secure investment destination, said observers.
They anticipate continued demand, though at a slower rate.
” We still see foreign buyers today, but much less than we did before the ABSD rate hike.” These are primarily foreign buyers with high net worth, according to Mr. Eugene Lim, the chief executive officer of ERA Realty, a real estate company.  ,  ,
” They prefer Singapore’s real estate market primarily because they look at it as a safe investment. Their investment in Singapore is a good value storage option because the Singaporean dollar is also very strong.
Private home prices could rise by up to 6 % this year, according to real estate companies ERA and OrangeTee, which is less than the 10.6 % increase in 2021.