Singapore’s higher property tax to have short-term impact on home sales as buyers reconsider options, analysts say
Singapore’s higher property tax to have short-term impact on home sales as buyers reconsider options, analysts say
27-Jan-2022 Intellasia |
South China Morning Post |
5:02 AM
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.
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“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.
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.
Apart from the setback in December, overall new home sales in Singapore rose last year. An estimated 12,734 units were sold, 27.5 per cent more than the 9,982 units sold in 2020, according to property consultancy Knight Frank. Foreigners bought 1,498 units in 2020 and 2,163 units last year, or between 15 per cent and 17 per cent of the total new sales.
Buyers from Hong Kong accounted for between 0.1 per cent and 0.3 per cent of private home sales from 2018 to 2021, according to PropNex Realty, a listed property agency in Singapore.
Although the latest measures are likely to stifle demand, prices are still forecast to rise at a slower pace, according to analysts.
“Overall private residential prices are projected to increase around 1 per cent to 3 per cent in 2022 considering the cooling measures and probable interest rate hikes,” said Leonard Tay, head of research at Knight Frank Singapore.
New home sales in Singapore could reach between 8,000 and 9,000 units, with developers likely to launch fewer projects, Tay said.
PropNex expects demand to hold steady as the Southeast Asian financial hub signalled its willingness to ease more pandemic restrictions even as it battles the more transmissible Omicron coronavirus variant. The agency expects private home prices to grow at a slower pace of 3 per cent to 5 per cent, in line with Singapore’s GDP forecast for 2022.
“Barring the worsening of the pandemic leading to stringent restrictions, we are cautiously optimistic about the residential property market in Singapore in 2022,” said Ismail Gafoor, CEO of PropNex. “We project that 15,000 to 16,000 private homes could be transacted in the resale market, and 9,000 to 10,000 new private homes could be sold this year.”
https://sg.news.yahoo.com/singapore-higher-property-tax-short-061039243.html
Category: Singapore
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