Singapore’s higher property tax to have short-term impact on home sales as buyers reconsider options, analysts say

Sales of private residential units fell 58.4 per cent in December from a month earlier as the higher levy dampened demand

The stamp duty on foreign buyers was raised in December from 20 per cent to 30 per cent and on companies from 25 per cent to 35 per cent

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Residential buildings under construction at the Punggol area in Singapore, in July 2021. Photo: Bloomberg

Published: 7:30am, 26 Jan 2022

Property demand in Singapore is likely to remain subdued in the first half of the year as buyers digest the latest cooling measures rolled out by the city state, analysts said.

In December, the government increased the additional buyer’s stamp duty imposed on foreigners from 20 per cent to 30 per cent. Entities, meanwhile, have to pay 35 per cent, up from 25 per cent.

The latest curbs immediately dampened demand for property, with developers last month selling 643 private residential units, 58.4 per cent lower than the 1,547 units in November and 47.2 per cent lower than the 1,217 new homes sold in December 2020, according to PropertyGuru, an online property portal with a presence in 14 markets in Asia.

“With the new curbs announced, property buyers are pausing to reconsider options and await further market reactions from sellers and developers,” said Hari Krishnan, CEO and managing director of PropertyGuru.

The Singapore government has forecast 2022 GDP growth of between 3 and 5 per cent following a 7.2 per cent growth last year. Photo: Getty Images

In increasing the levy imposed on foreign homebuyers, the Singaporean government cited the 9 per cent increase in the prices of private housing since the first quarter of 2020. The resale market for public housing rose about 15 per cent over the same period. The city state’s gross domestic product shrank by 5.4 per cent in 2020 because of the impact of Covid-19 before expanding 7.2 per cent last year, the fastest in over a decade.

In 2018, Singapore government imposed cooling measures to tackle rising property prices. The additional buyer’s stamp duty on first time foreign buyers was raised by 5 per cent to 20 per cent and for non-individuals by 10 per cent to 25 per cent. Besides this, a non-remittable levy of 5 per cent was imposed on residential developers.