The View | Why Singapore’s targeting of foreigners to cool property market makes no sense

Singapore’s attempts to cool its residential property market are a recurring theme in Asian housing policy. In recent years, they have taken on added significance as governments around the world move to address mounting concerns about affordability.

Some countries have resorted to draconian and indiscriminate measures. In 2018, New Zealand prohibited most foreigners from buying existing properties unless they had secured the approval of the nation’s Overseas Investment Office. Canada announced a similar ban last year – albeit for a two-year period and with more exemptions – that caused such confusion the government was forced to clarify that it did not apply to commercial real estate.

Until recently, Singapore had taken a more judicious approach. Rather than singling out foreigners, the government targeted sources of speculative demand regardless of their origin.

In December 2021, additional stamp duties for Singaporean citizens and permanent residents buying second homes were raised to 17 per cent and 25 per cent respectively. Rates for purchasing third and subsequent homes were increased to between 25 and 30 per cent. Non-residents, meanwhile, were charged 30 per cent for their first and subsequent purchases.

However, the latest round of cooling measures, introduced on April 26, penalise foreigners much more severely. While additional stamp duties for Singaporean citizens and permanent residents buying second and subsequent homes were increased modestly, the rate for foreigners buying any residential property was doubled to a staggering 60 per cent.

Even Singapore’s property market, which has grown accustomed to successive attempts by the government to take the heat out of the housing market, was taken aback by the harshness of the measures. Real estate agency OrangeTee & Tie said “cooling measures have turned into ‘freezing measures’ for foreign buyers”.