(CMR) Singapore is raising taxes for property purchases, doubling taxes for foreign buyers, to cool its hot housing market amid concerns about affordability for locals and to prevent prices from running ahead of economic fundamentals.
The government said both local second home buyers and foreign buyers of residential properties will now have to pay higher additional buyers’ stamp duties. This will be the third round of cooling measures by Singapore following previous similar moves.
The government said the implementation of the property market measures in December 2021 and September 2022 has had a moderating effect.
“Demand from locals purchasing homes for owner-occupation has been especially strong, and there has also been renewed interest from local and foreign investors in our residential property market,” the Ministry of Finance, National Development Ministry, and Monetary Authority of Singapore said in a joint statement.
“If left unchecked, prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes,” the government said.
The biggest jump is the doubling of stamp duties for foreign buyers from 30% to 60%. For citizens purchasing their second residential property, the rate increased from 17% to 20%. Stamp duties increased from 25% to 30% for citizens purchasing their 3rd and subsequent residential properties and Singapore Permanent Residents purchasing their 2nd residential property.
Citigroup has called the doubling of taxes on foreigners “draconian,” saying foreign buyers were between 5 and 7 percent in the past four quarters, according to CNBC.
According to a research report by OrangeTee & Tie last year, Singapore remains a top investment destination among foreign investors, with purchases by foreigners at a pre-pandemic level.
“Despite the recent interest rate hikes and cooling measures implemented in December 2021, foreign buyers purchased more luxury condos priced at S$5 million [$3.74 million] and above this year,” the report noted.
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