National Development Minister, Mr Khaw Boon Wan has announced a significant drop in the number of foreign buyers of property in Singapore, from 17 per cent in 2011 to only 7 per cent in Q3 of this year. From 1, 400 transactions per quarter in 2011, it’s now down to 330 transactions last quarter.
Was the high in 2011 reason for the government implementing the 10% Additional Buyers’ Stamp Duty (ABSD) in December of the same year, and is the current drop the intended goal of that exercise? Sub-sales, which are an indication of the property speculation level in the market, has decreased by 3 per cent. It stood at 7.6 per cent in 2011.
This year, there were a few rounds of property cooling measures, including a new debt-servicing framework and also caps of loan limits. Increase in the ABSD percentage may have also put a bitter taste in the mouths of some investors. The luxury market has been quiet for awhile, but property developers seem to be hopeful about next year, with some holding back on launches, waiting out the year-end festive period which is usually a lull period for the property market.
Moving forward, Mr Khaw says regulatory policies will need to remain nimble in order to deal with a fluctuating and ever-changing industry. Although many other countries have had stricter property-buying rules for foreign buyers, such as in Australia, it does not necessarily mean the property market is entirely stable. They are in fact experiencing signs of a property bubble and thus being able to react to market response is a skill the authorities will have to hone. Perhaps also with some good luck on the side.
In Hong Kong, the government is already imposing a 50% down payment on properties. With the minimum sum raised six times over less than three years, they seem determined to find ways to make homes more affordable. The Singapore government has not resorted to such drastic measures yet, but in future, will we go down the same road? Will more Singaporeans be able to afford their own homes then?