Foreign buying in private homes at five-year high in Q1, just before rollout of cooling measures

May 15, 2023

THE number of non-landed private homes – excluding executive condominiums – bought by foreigners or non-permanent residents (NPRs) hit a five-year high in the first quarter of 2023, just before the Additional Buyer’s Stamp Duty (ABSD) rates were hiked at the end of April.

Foreigners bought 259 condo units in Q1 2023, up 14.6 per cent from 226 units in Q4 2022. This was also above the five-year quarterly average volume of 249 units between Q1 2018 and Q4 2022, said a report by Orange Tee & Tie’s senior vice-president of research and analytics Christine Sun. The report drew on caveats as at May 15 and covered new, resale and sub-sale transactions.

And foreign buying continued to gain momentum in the month of April before the new ABSD regime was announced.

Latest data showed that in April, the number of new units sold by developers to foreign buyers almost doubled to 70, from the previous month. Huttons senior director of research Lee Sze Teck observed that geopolitical tensions may have led to more foreigners buying properties in safe havens like Singapore.

In Q1, foreigner purchases accounted for 6.9 per cent of private home transactions, up from 3.1 per cent in the year-ago period, OrangeTee & Tie data showed.

This is the highest proportion of foreign purchases since Q1 2018, when foreign purchases stood at 7.3 per cent.

Foreign buying of luxury condos also rose to almost a decade high, despite ABSD being raised to 30 per cent for NPRs in December 2021.

The number of non-landed luxury homes in the prime Core Central Region (CCR) bought by foreigners spiked by 123.9 per cent to 159 units in Q1, from 71 units last year.

On Apr 27, the government moved to dampen what it termed as investment demand, doubling ABSD for foreign purchasers to 60 per cent. ABSD was raised from 17 per cent to 20 per cent for Singaporeans buying their second property, and from 25 per cent to 30 per cent for their third and subsequent properties.

ABSD was raised from 25 per cent to 30 per cent for PRs buying their second property, and from 30 per cent to 35 per cent for their third and subsequent residential properties. The rate for first-time homebuyers stayed unchanged.

OrangeTee & Tie noted in its report that mainland Chinese buyers could be most affected by the jump in ABSD, as they constituted the biggest number of foreign and PR buyers of private non-landed homes from 2019 to Q1 2023.

PR and NPR buyers from China purchased 316 non-landed homes in Q1, almost twice the 159 units bought by Malaysians, the second-largest group of foreign buyers.

In the CCR, Chinese buyers bought 111 luxury condos, or 10.8 per cent of total luxury condo sales in the quarter.

While ABSD hikes may knock down the number of Chinese buyers, OrangeTee & Tie’s Sun said more buyers from China and Indonesia may purchase condos as PRs or new citizens, given that they will then be liable for less ABSD.

Sun believes the cooling measures are unlikely to affect buyers’ perception of Singapore as one of the best places for property investment.

https://www.businesstimes.com.sg/pro...oling-measures