Previously, with a series of big moves to prevent foreign hot money from pouring in, Singapore's housing prices have finally begun to cool down compared to the previous month | Singapore | housing prices
After being heavily regulated by the Singapore government to attract foreign buyers, the scorching Singapore real estate market finally began to cool down after three years.
According to the final report released by the Urban Renewal Authority of Singapore, the prices of private homes in Singapore fell 0.2% month on month in the second quarter. Although slightly lower than expected, this is the first decline in private housing prices in Singapore since the first quarter of 2020.
After the epidemic, the Singapore real estate market began to soar. According to data from the Urban Renewal Authority of Singapore, private housing prices in Singapore increased by 8.4% in 2022, while the increase in 2021 was 10.6%. As a result, the Singapore government has repeatedly raised taxes and fees on home purchases, especially for foreigners, to regulate housing prices.
Zhou Shixin, Associate Researcher at the Asia Pacific Research Center of the Shanghai Institute of International Studies, told First Financial reporters that the Singapore government's use of economic leverage to restrict foreign homebuyers locally has a significant promoting effect on stabilizing Singapore's society and economy. The current high tax rate on foreign homebuyers is expected to ease after the real estate market stabilizes, but the restrictions will still exist for a long time.
Start cooling down
In sync with the slight decline in housing prices, the rental growth of private housing has also begun to slow down. The second quarter saw a month on month increase of 2.8%, although still rising, this is the smallest increase since 2021. At the same time, it is expected that about 20000 private housing units will be completed this year, which is the largest annual supply since 2017, and it is expected to further alleviate the driving force of rent increases.
As an important financial center in Asia, Singapore is the preferred destination for various funds and wealthy property developers. During the epidemic, overseas buyers have flooded into the Singapore real estate market. For non Singapore permanent residents, in principle, they can only purchase private residences.
The housing supply structure in Singapore is mainly composed of public housing units and supplemented by private homes. About 80% of Singaporeans live in government provided housing units, which are priced by the government. As the government does not need to pay land fees and subsidizes construction costs, their prices are at least 50% to 70% lower than similar private homes. Only about 20% of high-income families and foreigners live in private housing constructed by developers.
After meeting certain conditions, the holder of a public housing unit can resell it and enter the market. Nowadays, the prices of public housing units are also affected by the high prices of private housing. Economist Xie Dongming from Overseas Chinese Bank of Singapore previously told First Financial reporters that Singapore is a relatively small market, and from basic housing to high-end housing, it is easy to influence each other, resulting in price linkage.
As a result, the Singapore government has implemented two housing cooling policies in December 2021 and September 2022. As the real estate market continues to heat up, on April 27th of this year, the Singapore government launched another tough move by raising the additional buyer stamp duty that foreign buyers must pay for home purchases from 30% to 60%, which is the highest tax rate for foreign buyers worldwide.
The taxes and fees required to purchase property in Singapore are collectively referred to as stamp duty and are specifically divided into two types: buyer stamp duty and additional buyer stamp duty. The buyer's stamp duty is required to be paid when purchasing the property, and the additional buyer's stamp duty depends on the buyer's identity and the number of properties held.
According to the latest report from Global Real Estate Technology Group's Overseas IQI, Singapore ranked 10th in the list of destinations for Chinese overseas buyers in the first half of this year based on the platform's buyer inquiries.
Looking ahead to the future
Although real estate prices have now stabilized, while using price leverage to regulate, laws and regulations on real estate have also been revised. The Singapore Department of Justice and the Singapore Land Management Authority announced on the evening of July 19th that starting from the 20th, foreign buyers of land currently planned for "commercial and residential" purposes must obtain government approval.
The Singapore government stated that this measure is implemented after the revision of the residential real estate law, with the aim of protecting the residential land of Singaporeans. It will not affect overseas owners who currently hold such properties, but if they plan to redevelop the property, they will need government approval.
The Director of the Monetary Authority of Singapore, Meng Wenneng, stated in July that there are signs that the Singapore real estate market has begun to stabilize, and the Monetary Authority will be determined to ensure that property prices remain consistent with economic fundamentals, rather than being driven by speculation and hot money inflows.
Singapore's Finance Minister Huang Xuncai also stated in an interview with Chinese media such as First Financial in December 2021, "We do not want Singapore and external investors to invest heavily in real estate, causing housing prices to deviate from economic fundamentals. As a result, many Singaporeans may feel that houses are unaffordable.".
Analysts say that the previous crazy performance of the Singapore real estate market has increased the living pressure on local Singaporeans, and on the other hand, high housing prices have led to an increase in the cost of living, resulting in a decrease in foreign investment willingness and the loss of outstanding talents, thereby reducing Singapore's attractiveness as an international financial center.
