Can Singapore raise the stamp duty on foreigners’ real estate to 60% to buy a house？

　　With the global major housing market cooling down, Singapore’s real estate prices have risen for 12 consecutive quarters. In order to solve this problem, at the end of April, the Singapore government raised the additional buyer stamp duty (ABSD) for foreigners to purchase residential properties by 30 percentage points to 60%, with immediate effect from April 27th.

　　This has caught many real estate agents and property buyers off guard. "Take a private house worth 2 million Singapore dollars as an example, which means that the extra buyer stamp duty that foreign buyers have to pay will soar from 600,000 Singapore dollars to 1.2 million Singapore dollars (about 6.21 million yuan)." Deng Minjie, executive director of AsianPrime Properties, told the First Financial Reporter.

　　The New Deal was introduced because with the high housing prices, Singaporeans are increasingly worried about being squeezed out of the housing market, and high housing prices may also make Singapore less attractive as an international financial center.

　　According to the latest data from the Urban Renewal Authority of Singapore, the price of private housing in Singapore rose by 3.3% in the first quarter, compared with only 0.4% in the previous quarter. In 2021 and 2022, local house prices increased by 10.6% and 8.6% respectively.

　　The third round of cooling in two years

　　In other major international metropolises, the proportion of ABSD is much lower. For example, the tax rate for foreigners to buy a house in Vancouver is 29%, while the tax rates in London, Melbourne and Sydney are around 14%. New york’s tax rate is only 4.3%.

　　In a joint statement, the Ministry of Finance, the Ministry of National Development and monetary authority of singapore explained the new policy: "The demand of local people to buy their own houses has been particularly strong, and local and foreign investors have shown renewed interest in our residential real estate market.If not controlled, the price may exceed the economic fundamentals. At the same time, there is a risk that the ratio of price to income will continue to rise."

　　Deng Minjie told CBN that under the risk of high loan interest rate environment and global economic challenges, stabilizing real estate prices is the top priority of the Singapore government. "This round of cooling measures is to slow down the purchase demand, especially the purchase demand of investors and foreigners."

　　In fact, this is the third cooling measure for real estate since the COVID-19 epidemic. In December 2021 and September 2022, the government took similar early preventive measures, which had a "mitigation effect".

　　For example, the stamp duty of foreign buyers in Singapore increased from 20% to 30% in December 2021, which led to a decrease of 16.5% in the number of apartments purchased by foreigners in 2022. But in fact, the local real estate prices are still not loose.

　　According to a research report of Orange Tee&Tie, a Singapore brokerage company in 2022, Singapore is still the primary investment destination for foreign investors after several rounds of cooling measures.

　　"Despite the interest rate hike and the cooling measures implemented in December 2021, foreign buyers bought more luxury apartments with a price of S $5 million (about RMB 25.87 million) and above in 2022," the report said. "The purchases of luxury apartments by foreigners and those who have obtained permanent residency in Singapore have almost returned to the level of 2019."

　　According to the buyer’s inquiry data provided by Juwai Iqi Group, a global real estate technology company headquartered in Kuala Lumpur, Singapore is the favorite overseas purchase destination for China buyers. Since 2021, Singapore has entered the top 10 overseas inquiries of China buyers, ranking ninth that year. Although the Singapore government raised the stamp duty on foreign buyers at the end of 2021, Singapore has been ranked tenth in the inquiry list for the next two years.

　　What will be different this time?

　　Foreign buyers account for only a small proportion of Singapore’s real estate sales. According to the data of the Urban Renewal Authority of Singapore, foreign buyers accounted for 4.7% of Singapore’s house purchases last year, rising to 7% in the first quarter of this year.

　　Nicholas Mak, chief research officer of MOGUL.sg, a real estate information platform, therefore believes that if only 10% of purchases are affected, then these measures have limitations. "How can we cool the market if it has little impact on the other 90%? It’s like you have a burning oil plant, and these people don’t use the right tools to put out the fire. "

　　At the same time, people who can afford to buy real estate in Singapore may not care about paying more taxes.

　　Kashif Ansari, co-founder and CEO of IQI, told the First Financial Reporter that the high housing prices in Singapore have eliminated a number of foreign buyers. High-net-worth people who plan to buy Singapore real estate now may not change their decision to buy a house because of a 30% tax increase.

　　“Of course, those who specialize in real estate speculation will be discouraged. On the other hand, foreign buyers aiming at global allocation may turn their eyes to luxury houses in Malaysia or Dubai."He said.

　　Deng Minjie said that according to past experience, foreign buyers often balk after receiving the news, especially this time the increase has doubled.

　　However, after the introduction of the New Deal, one of her clients, the foreign buyer who originally planned to look at the house, did not change her mind. "We have communicated with them in time about the tax increase, and they are still willing to continue the house purchase plan. Their feedback is that Singapore will be the place where they want to invest in immigrants. " She also revealed that,Her buyers reported that the unit price of houses in Singapore was reasonable, but the tax was very high.

　　Sun Yanqing, research director of Orange Easy Industry, told the First Financial Reporter: "Cooling measures may curb demand in the next few months. This may provide time for more housing completion and housing supply. When there is a better market balance, the price may stabilize. When demand shrinks, price increases may also slow down. This will help first-time home buyers and HDB upgraders to buy their first home. "

　　"We have slightly lowered the price forecast for the whole year of 2023 from 5%-8% to 4%-7%." Sun Yanqing said.

　　Deng Minjie predicted that as first-time buyers of Singapore citizens and permanent residents will not be affected under the New Deal, these groups will become the main demand drivers in the coming months. According to the data in 2022, this group accounts for about 90% of residential real estate transactions.