The Business Times | MARCH 28, 2013
Their share of February purchases plunges in the wake of the latest cooling measures
[SINGAPORE] The Jan 12 cooling measures appear to have spooked Singapore permanent residents (PRs) looking to buy private homes here. Their share of private home purchases dived in February after the measures introduced additional buyer's stamp duty (ABSD) on a PR's first residential property purchase here. The ABSD rate on subsequent purchases by PRs was also raised significantly.
However, most analysts expect the PR buying share to recover, at least among PRs acquiring their first property.
An analysis of URA Realis caveats data by Knight Frank shows that in February, PRs accounted for just 12.7 per cent of the 789 caveats lodged for the purchase of private homes excluding executive condominiums in that month. This marked a 5.7 percentage-point drop from the 18.4 per cent share held by PRs of the total 2,876 caveats in January.
Conversely, Singaporean buyers' share climbed 5.5 percentage points, from 71.1 per cent in January to 76.6 per cent in February. Singapore citizens acquiring their first residential property continue to be spared the ABSD under January's cooling measures.
Foreigners who were not PRs held their share at 10.1 per cent in February, from 10 per cent in January, despite the ABSD rate levied on them for any home purchase being raised from 10 per cent to 15 per cent.
The analysis covered private housing deals in both primary (developer sales) and secondary markets.
February saw a big drop in caveats lodged, across the board. The number of caveats lodged by PRs posted the sharpest month-on-month decline of 81.1 per cent, from 530 in January to 100 in February.
Non-PR foreigners' purchases dropped 72.3 per cent from 289 to 80, while caveats by Singapore citizens slipped 70.5 per cent (falling from 2,046 to 604).
Knight Frank head of residential Wendy Tang said the drop in the PR share in February probably reflects a knee-jerk reaction to the Singapore authorities introducing a 5 per cent ABSD on PRs for their first residential property purchase here and raising the ABSD rate for a PR's second and subsequent property purchases to 10 per cent from 3 per cent previously.
Looking ahead, she expects the PR buying share to start recovering, at least among PRs who are immigrating to Singapore with their families and buying a home for their own occupation. "This set will be more likely to accept the 5 per cent ABSD on their initial residential property purchase as part of the transaction cost," she reckons.
"However, for PRs looking for an investment property, the 10 per cent ABSD rate would eat into their yield and they may look at alternative investments," Ms Tang added.
CBRE executive director (residential) Joseph Tan said February's drop in the PR buying proportion has to be seen against the small number of overall transactions in that month amid a dearth of new launches.
A clearer picture could emerge when more caveats for March deals surface over the next few weeks. Preliminary numbers (based on just 181 caveats) suggests a slight pick-up in the PR buying share to 13.8 per cent so far this month, going by Knight Frank's analysis.
Among this month's major condo launches, the percentage of units picked up by PRs varies. For instance, about 9 per cent of the 250 units sold at the 332-unit Sennett Residence were acquired by PRs. At a much bigger condo launch in the suburbs, the figure was higher at around 17 per cent.
Said CBRE's Mr Tan: "From our experience, the PR share of private home-buying is currently around 15 per cent, close to that for last year. You could say PRs are getting used to the 5 per cent ABSD on their first residential purchase as a transaction or acquisition cost."
Based on Knight Frank's caveats analysis, PRs accounted for 15.8 per cent of private home purchases last year, up from a 13.3 per cent share in 2011. Non-PR foreigners' share slipped from 17.5 per cent in 2011 to 6.4 per cent in 2012 in the aftermath of the 10 per cent ABSD slapped on them on any residential property purchases here effective Dec 8, 2011.
The Singaporean buying share climbed from 66.8 per cent in 2011 to 76.9 per cent in 2012.
China citizens continued to be the biggest group of foreign buyers, after January's cooling measures. In February, they made up 26.1 per cent of foreign buyers (including PRs) of private homes, down slightly from their 27 per cent share in January. Indonesians saw their share go up from 19.9 per cent in January to 23.9 per cent in February; conversely Malaysians' share dived from 26.5 per cent to 19.4 per cent.
Among foreign buyers, demand from US citizens held up best in February. US citizens - along with nationals and PRs of Switzerland, Liechtenstein, Norway and Iceland - are accorded the same treatment as Singapore citizens for the ABSD due to their respective countries' free trade agreements with Singapore.
The number of caveats lodged by Americans dipped from 13 in January to 12 in February. Indians saw the sharpest decline of 88.3 per cent (with caveats sliding from 111 in January to 13 in February), followed by Malaysians with an 83.9 per cent drop (number of caveats slid from 217 to 35). Purchases tumbled 78.7 per cent among China nationals and 73.6 per cent among Indonesians.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)