Despite the Singapore government's repeated implementation of stringent property cooling measures, which have curbed the influx of some foreign buyers, the booming property market remains difficult to suppress. This highlights the deep-rooted culture of property investment in this nation, where the home ownership rate is as high as 91%.
According to World Journal reports, to rein in skyrocketing property prices, Singapore's real estate transaction taxes are among the highest in the world. Although these taxes have discouraged foreigners, they have not scared off local buyers. Last year, property prices increased by 3.9%, and by 6.8% the year before.
Singaporeans are passionate about investing in property, with a home ownership rate as high as 91%. Since its founding 60 years ago, the government has promoted various policies to encourage citizens to buy homes, based on the belief that a sense of belonging is essential to defending the country. Subsequently, Singapore's political stability and strong economic growth attracted wealthy foreign investors. First came immigrants from Indonesia in the 1970s, followed by those from Asia and the West, especially buyers from China.
The influx of foreign capital, combined with the baby boomer generation investing large savings in real estate, has caused Singapore’s average property prices to soar by over 150% in the past 20 years. The government has attempted to curb demand by increasing transaction costs.
In 2011, on top of the existing 1% to 3% stamp duty, the government imposed the Additional Buyer’s Stamp Duty (ABSD). Initially, Singaporeans had to pay a 3% ABSD on their third and subsequent home purchases, while foreigners had to pay 10%. However, as property prices continued to rise, the government has continued to raise tax rates. Currently, foreigners must pay a 60% ABSD on any home purchase, while Singaporeans pay 20% on their second property and 30% on their third and subsequent properties.
ERA CEO Eugene Lim (transliterated) said: “This has curbed foreign demand; we rarely see foreigners buying property now.” He noted that two years ago, most foreign buyers were from China, Indonesia, Malaysia, or India.
Over the past two years, Americans have surpassed Chinese buyers to become the largest group of foreign property buyers in Singapore, accounting for as much as 50%. Meanwhile, wealthy Singaporeans are purchasing their second and third properties under the names of family members to avoid the high taxes.