SINGAPORE - Fewer foreigners bought condominium units in the second quarter of 2023 as they were apparently deterred by the doubling of the additional buyer’s stamp duty (ABSD) for foreign buyers to 60 per cent in end-April.
A total of 205 private non-landed homes were bought by foreigners in the second quarter, down 22.6 per cent from 265 units in the previous quarter, a report by OrangeTee & Tie released on Thursday showed. The figures exclude executive condominiums (ECs) which foreigners are not allowed to buy.
The proportion of foreign purchases also fell from 6.9 per cent to 4.2 per cent over the same period.
Foreigners were hit with the highest ABSD hike in the latest round of cooling measures which were introduced on April 27 after the proportion of foreign buyers had steadily crept up over the previous few quarters.
Americans, who did not feel the pinch as they are subject to the same stamp-duty treatment as Singaporeans, overtook mainland Chinese as the largest group of foreign buyers in the second quarter, the report showed. Singaporeans buying their first home are not subject to ABSD.
Mainland Chinese were the largest group of foreign buyers in Singapore from 2017 to 2022 and in the first quarter of 2023, said Ms Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics.
However, this changed in the second quarter of 2023 as 56 condo units were bought by Americans, surpassing the 51 units purchased by mainland Chinese buyers, she said.
Transactions by mainland Chinese buyers fell significantly after April’s cooling measures, dipping 53.2 per cent from 109 units in the first quarter.
In contrast, transactions by American buyers dropped only 11.1 per cent, from 63 units in the first quarter.
Americans, along with nationals from Iceland and Norway, among others, are accorded the same stamp-duty treatment as Singapore citizens, based on respective free-trade agreements about a decade ago.
Ms Sun said Americans may continue to be among the top foreign buyers in Singapore as they are less affected by the increased ABSD.
“Other foreigners may purchase properties after becoming Singapore citizens or PRs since they pay less ABSD. Some may switch to buying non-residential properties,” she said.
Since April 27, Singaporeans buying their second residential property have to pay an ABSD rate of 20 per cent, up from 17 per cent. Those buying their third and subsequent property will pay 30 per cent, up from 25 per cent.
The rate for Singapore permanent residents (PRs) buying their second residential property went up from 25 per cent to 30 per cent, and from 30 per cent to 35 per cent for third and subsequent properties.
Despite the increase in ABSD, local demand remained strong as more Singaporeans bought private homes in the second quarter.
Singaporeans bought 3,895 condo units, excluding ECs, in the second quarter, with their purchases surging 40.8 per cent from the 2,766 units in the first quarter.
Over the same time period, the proportion of condo units bought by Singaporeans jumped from 72.3 per cent to 79.9 per cent.
April’s cooling measures were the third round of property curbs in 16 months and the buoyant housing market is now starting to show signs of moderation.
Private home prices declined by 0.4 per cent in the second quarter, the first quarterly decline in three years, flash estimates from the Urban Redevelopment Authority (URA) released on July 3 showed.
Ms Sun said buying activities are likely to remain robust in the second half of 2023, as some developers may bring forward their project launches before the start of the Hungry Ghost Festival in end-August, which may boost new home sales.
Barring a global economic downtown or unforeseen circumstances, she expects the overall property price index to climb between 4 and 6 per cent this year.
