Expats in Singapore face having to pay more for property with new taxes being introduced as part of a government policy to cool the housing market. Foreigners and corporates who buy residential property in Singapore will now be subject to an additional buyer's stamp duty (ABSD) of 15% of the purchase price, up from the previous 10%.
Singapore citizens also face more taxes as those buying second homes will be hit with an ABSD of 7% while people with permanent residency status will pay an additional stamp duty of 5% on their first home purchase. The ABSD had previously applied to citizens buying their third residential property and permanent residents getting their second.
Some concessions will also be extended to selected groups of buyers, such as married couples with at least one Singaporean spouse who are purchasing a second property so long as they intend to sell their first residential property. ‘We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road,’ said Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam.
The increase in property tax comes as the latest figures from the Urban Redevelopment Authority show that private home prices increased by 1.8% in the fourth quarter of 2012, up from 0.6% in the previous quarter. Resale prices of government-built HDB apartments which are generally bought by Singaporeans, increased by 2.5%, quarter on quarter, the fastest gain in five quarters.
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On an annual basis prices increased by 2.8%, much less than the 5.9% increase in the previous year but still enough to make the government want to cool the market. ‘Interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market,’ added Shanmugaratnam. Interest rates in Singapore have fallen to near record lows with banks charging as little as 1% per annum on housing loans. The government added that the new measures are temporary and will be reviewed in future depending on market conditions.
Some analysts expect the Eurozone crisis to drive high net worth individuals to invest in real estate in Singapore , boosting the high end property market. Overall they expect a slower start to the year with price increases of up to 3% and then an overall increase of 7% for the whole of the year. Others think that the mass market segment should also see double digit increases of 10% to 15% in 2013 due to a rapid increase in land prices.