New Reporter
23-06-23, 16:33
Foreigners, PRs’ share of homebuyers up despite cooling measures
Jun 23, 2023
PERMANENT residents (PRs) and foreigners now make up a larger share of Singapore’s private home buyers than they did in 2020, and multiple rounds of cooling measures have yet to change that.
An analysis of caveat data by property consultancy CBRE for The Business Times showed that the proportion of non-landed private homes purchased by non-citizens is 23 per cent for the year up to early June, up from the 19 per cent in 2020.
Most of these purchases were made by PRs – they bought 17 per cent of private homes this year, up from 15 per cent in 2020. The proportion has been rising steadily since 2018.
The proportion of buyers who are foreigners – that is, not PRs – stood at 6 per cent for the year thus far, up from 4 per cent in 2020.
The sharp increase in additional buyer’s stamp duty (ABSD) in April this year took some shine off the draw of Singapore private property for foreigners. PRs now pay 30 per cent ABSD on their second property; non-PR foreigners pay 60 per cent on their first purchase.
Tricia Song, CBRE’s head of research for South-east Asia, noted that there were fewer purchases made by PRs in May – down 23.2 per cent to 291 units, from 379 a year ago.
As a percentage of total sales, however, PR demand remained “quite comparable”, at 16 per cent in May 2023, against 17 per cent for the whole of 2022 and 20 per cent in Q1 2023.
“Foreigner (non-PR) purchases have come off more significantly, in both absolute and percentage terms, to 4 per cent in May 2023, against 5 per cent for the full-year 2022, and 7 per cent in Q1 2023,” said Song.
The latest data on developers’ sales of new private homes in May showed purchases by foreigners falling sharply. Lam Chern Woon, head of research and consulting at real-estate consultancy Edmund Tie, said overall sales of non-landed homes to foreigners in both the new and resale markets halved to 71 units in May, from 158 units in April. Foreigners’ share of total sales fell from 5.4 per cent to 3.7 per cent; at the start of the year, it was 9.2 per cent.
“On the other hand, home sales to PRs held up reasonably better. Although sales fell by about 25 per cent from 400 units to 302 units, the PR share of demand picked up to 15.6 per cent from 13.6 per cent,” he said.
“We should not overlook the group of newly minted citizens and PRs. On average, we have about 50,000 citizenships and permanent residencies granted annually. The lower-tier ABSD rates for the new residents will undoubtedly sustain further property purchases,” Lam added.
Statistics from property agency PropNex Realty also showed that non-citizen buying hit a high last November – they bought 30.9 per cent of all homes sold that month. The last time this figure crossed the 30 per cent mark was in January 2017, when non-citizens accounted for 31.1 per cent of all sales.
To be fair, measures to reduce speculation in the property market have curbed the appetite of foreign buyers in the past. Roughly a decade ago, the proportion of homebuyers who were foreigners was a double-digit percentage.
In 2011, the government introduced ABSD. For foreigners buying residential property, the ABSD was 10 per cent of the transaction value or market value (whichever was higher). For PRs, the ABSD was 3 per cent, but it kicked in only with the purchase of a second property.
The ABSD has been raised progressively over the years, and is also now payable by Singaporean buyers.
To further cool the property market, limits on borrowing have been ratcheted up as well.
But the intensifying rate of cooling measures in recent years has had a more subdued impact, particularly on PR behaviour.
The proportion of PR homebuyers has ranged between 13 per cent and 24 per cent since 2013. Singaporeans accounted for 65 per cent to 80 per cent of total sales.
https://i.imgur.com/5ItSz3t.png
CBRE’s Song noted that although the number of foreign and PR purchases appeared to have fallen after the cooling measures in 2021 and 2022, such purchases have actually grown as a percentage of total sales since then.
https://i.imgur.com/9qapvAw.png
This is mainly because purchases made by Singaporeans have “come off more, on both an absolute and percentage basis”.
PropNex Realty head of research and content Wong Siew Ying pointed out that foreign and PR buyers were unaffected by the September 2022 measures, which were “mostly aimed at the public housing segment”.
In September 2022, borrowing limits were tightened further, and private-property sellers were made to wait 15 months before they could buy a resale Housing Development Board flat.
One reason foreign buying has remained steady could be that foreign buyers and PRs have significant capital, and do not need to rely as much on bank financing, market watchers have suggested.
And as Wong from PropNex noted, the city-state remains a “very attractive investment destination for foreigners looking to park their funds in real estate, and in a safe and stable country”.
Savills executive director of research and consultancy Alan Cheong pointed out that there is insufficient data, from a “statistical viewpoint”, to make definitive conclusions about the impact of the cooling measures.
“From a lay perspective, one would think that (the cooling measures) were effective because the absolute number of foreigners who bought in May fell,” he said. He added that the numbers from this month and the next would give a better sense of market demand.
“We have to wait till late August or early September to get the numbers to stabilise,” he added.
CBRE’s Song also noted that May’s data might not fully reflect the impact of the latest ABSD hike due to the transitional provision, which allowed some buyers to use the previous ABSD rates if their option to purchase was exercised on or before May 17.
OrangeTee & Tie’s senior vice-president of research and analytics Christine Sun believes the big disparity in ABSD rates might prompt more foreigners to purchase private homes as PRs or new citizens. She expects “the proportion of PR purchases may rise further”.
https://www.businesstimes.com.sg/property/foreigners-prs-share-homebuyers-despite-cooling-measures
Jun 23, 2023
PERMANENT residents (PRs) and foreigners now make up a larger share of Singapore’s private home buyers than they did in 2020, and multiple rounds of cooling measures have yet to change that.
An analysis of caveat data by property consultancy CBRE for The Business Times showed that the proportion of non-landed private homes purchased by non-citizens is 23 per cent for the year up to early June, up from the 19 per cent in 2020.
Most of these purchases were made by PRs – they bought 17 per cent of private homes this year, up from 15 per cent in 2020. The proportion has been rising steadily since 2018.
The proportion of buyers who are foreigners – that is, not PRs – stood at 6 per cent for the year thus far, up from 4 per cent in 2020.
The sharp increase in additional buyer’s stamp duty (ABSD) in April this year took some shine off the draw of Singapore private property for foreigners. PRs now pay 30 per cent ABSD on their second property; non-PR foreigners pay 60 per cent on their first purchase.
Tricia Song, CBRE’s head of research for South-east Asia, noted that there were fewer purchases made by PRs in May – down 23.2 per cent to 291 units, from 379 a year ago.
As a percentage of total sales, however, PR demand remained “quite comparable”, at 16 per cent in May 2023, against 17 per cent for the whole of 2022 and 20 per cent in Q1 2023.
“Foreigner (non-PR) purchases have come off more significantly, in both absolute and percentage terms, to 4 per cent in May 2023, against 5 per cent for the full-year 2022, and 7 per cent in Q1 2023,” said Song.
The latest data on developers’ sales of new private homes in May showed purchases by foreigners falling sharply. Lam Chern Woon, head of research and consulting at real-estate consultancy Edmund Tie, said overall sales of non-landed homes to foreigners in both the new and resale markets halved to 71 units in May, from 158 units in April. Foreigners’ share of total sales fell from 5.4 per cent to 3.7 per cent; at the start of the year, it was 9.2 per cent.
“On the other hand, home sales to PRs held up reasonably better. Although sales fell by about 25 per cent from 400 units to 302 units, the PR share of demand picked up to 15.6 per cent from 13.6 per cent,” he said.
“We should not overlook the group of newly minted citizens and PRs. On average, we have about 50,000 citizenships and permanent residencies granted annually. The lower-tier ABSD rates for the new residents will undoubtedly sustain further property purchases,” Lam added.
Statistics from property agency PropNex Realty also showed that non-citizen buying hit a high last November – they bought 30.9 per cent of all homes sold that month. The last time this figure crossed the 30 per cent mark was in January 2017, when non-citizens accounted for 31.1 per cent of all sales.
To be fair, measures to reduce speculation in the property market have curbed the appetite of foreign buyers in the past. Roughly a decade ago, the proportion of homebuyers who were foreigners was a double-digit percentage.
In 2011, the government introduced ABSD. For foreigners buying residential property, the ABSD was 10 per cent of the transaction value or market value (whichever was higher). For PRs, the ABSD was 3 per cent, but it kicked in only with the purchase of a second property.
The ABSD has been raised progressively over the years, and is also now payable by Singaporean buyers.
To further cool the property market, limits on borrowing have been ratcheted up as well.
But the intensifying rate of cooling measures in recent years has had a more subdued impact, particularly on PR behaviour.
The proportion of PR homebuyers has ranged between 13 per cent and 24 per cent since 2013. Singaporeans accounted for 65 per cent to 80 per cent of total sales.
https://i.imgur.com/5ItSz3t.png
CBRE’s Song noted that although the number of foreign and PR purchases appeared to have fallen after the cooling measures in 2021 and 2022, such purchases have actually grown as a percentage of total sales since then.
https://i.imgur.com/9qapvAw.png
This is mainly because purchases made by Singaporeans have “come off more, on both an absolute and percentage basis”.
PropNex Realty head of research and content Wong Siew Ying pointed out that foreign and PR buyers were unaffected by the September 2022 measures, which were “mostly aimed at the public housing segment”.
In September 2022, borrowing limits were tightened further, and private-property sellers were made to wait 15 months before they could buy a resale Housing Development Board flat.
One reason foreign buying has remained steady could be that foreign buyers and PRs have significant capital, and do not need to rely as much on bank financing, market watchers have suggested.
And as Wong from PropNex noted, the city-state remains a “very attractive investment destination for foreigners looking to park their funds in real estate, and in a safe and stable country”.
Savills executive director of research and consultancy Alan Cheong pointed out that there is insufficient data, from a “statistical viewpoint”, to make definitive conclusions about the impact of the cooling measures.
“From a lay perspective, one would think that (the cooling measures) were effective because the absolute number of foreigners who bought in May fell,” he said. He added that the numbers from this month and the next would give a better sense of market demand.
“We have to wait till late August or early September to get the numbers to stabilise,” he added.
CBRE’s Song also noted that May’s data might not fully reflect the impact of the latest ABSD hike due to the transitional provision, which allowed some buyers to use the previous ABSD rates if their option to purchase was exercised on or before May 17.
OrangeTee & Tie’s senior vice-president of research and analytics Christine Sun believes the big disparity in ABSD rates might prompt more foreigners to purchase private homes as PRs or new citizens. She expects “the proportion of PR purchases may rise further”.
https://www.businesstimes.com.sg/property/foreigners-prs-share-homebuyers-despite-cooling-measures