Channelnewsasia.com | 13 Apr 2013 12:08 AM
Foreign buyers of Singapore properties have not totally fled the market, despite the higher taxes that they have to pay following tough cooling measures. More are finding it worthwhile to adjust their budgets, just to get their hands on their dream homes.
SINGAPORE: Foreign buyers of Singapore properties have not totally fled the market, despite the higher taxes that they have to pay following tough cooling measures.
More are finding it worthwhile to adjust their budgets, just to get their hands on their dream homes.
A market flushed with cash and low borrowing rates has made investors all over the world to seek safe havens in Singapore properties in the last few years.
This has propped property prices faster than economic growth can catch up.
It has also led the government to come up with a series of cooling measures.
Among them is the introduction of Additional Buyer's Stamp Duty (ABSD).
When an ABSD of 10 per cent was first imposed on foreigners buying Singapore property in December 2011, the number of foreign buyers dipped 73.3 per cent on-quarter in the first quarter of 2012.
But when the ABSD was raised to 15 per cent in the seventh round of cooling measures introduced in January, the number of foreign buyers decreased at a slower rate of 15.9 per cent.
DWG's senior research manager, Lee Sze Teck, said: "For the previous cooling measures, when the government came out with that, foreigners were shocked they had to pay ABSD - Additional Buyers' Stamp Duty - on their first property purchase.
"This time round, when the revised ABSD came out, it is only an increase in the tax rates. So in a way it is more acceptable to them. So the dip in foreigners is less pronounced than the dip in Singaporeans and permanent residents."
From January 12, Singaporeans must pay ABSD of 10 per cent on their second property and permanent residents 5 per cent on their first property.
Still, foreigners who are exempted from paying ABSD - mainly those from countries which have Free Trade Agreements with Singapore - could be a potential market for developers.
DTZ's associate research director, Lee Lay Keng, said: "For foreign buyers, I think they (the developers) can look at the groups of foreign buyers that are not affected by ABSD measures, the ones that have the same tax treatment...US citizens, nationals from Iceland, Switzerland, Norway and Lichtenstein."
Most analysts Channel NewsAsia spoke to said it would take some months for a clearer direction of where the property market is heading after the seventh round of property measures was imposed in January.
Demand could still come from a large pool of first-time Singaporean buyers who are unaffected by any cooling measures, which are fast becoming a norm in Singapore and Hong Kong.
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