When the government announced higher additional buyer’s stamp duties in the latest round of property cooling measures, real estate consultant Aric Lim’s foreign clients were concerned that this may not be the final hike.
“They were asking, ‘Is 60 (per cent) the last stop?’ Nobody knows right?” said Mr Lim, who works for Huttons Asia.
The doubling of the additional buyer’s stamp duty (ABSD) from 30 per cent to 60 per cent for foreign buyers may initially discourage those who want to settle down in Singapore, he told CNA’s Steven Chia on the Heart of the Matter podcast.
But they will soon “come to terms with it, bite the bullet and move on”.
Mr Lim was discussing the impact of the ABSD rate increase with Dr Lee Nai Jia, head of real estate intelligence, data and software solutions at PropertyGuru Group.
Among the fresh round of hikes announced on late Wednesday night (Apr 26), the raising of the ABSD rate for foreigners was the highest increase.
This is the third round of cooling measures since December 2021.
According to the Urban Redevelopment Authority data, the proportion of foreign buyers has increased to 6.9 per cent in the first quarter of 2023, compared to 3.1 per cent in the same period last year.
Speaking to the media the day after the announcement, Minister for National Development Desmond Lee explained that the ABSD increases are a “pre-emptive measure” to dampen local and foreign investment demand as interest in the residential market continues to build up.
“Foreign interest in residential property in Singapore as an asset class continues to be strong,” he added.
“And therefore if we don’t take early pre-emptive measures, we may see investment numbers both by locals and by foreigners grow, and that will add stress to Singaporeans who are looking to buy residential property principally for owner occupation.”
Foreign buyers who want to sink their roots in Singapore and contribute to the economy will think twice initially about buying a residential property, said Hutton Asia’s Mr Lim in the podcast.
But instead of turning to other cities to invest, some may even consider applying for permanent residency ahead of their planned timeline, he added, primarily because Singapore is seen as “a very comfortable environment for them, very safe”.
PropertyGuru Group’s Dr Lee also noted that even with the new ABSD rate, foreigners will still be attracted to buy properties here, compared to cities like Shanghai where prices are much higher.
Source: CNA