Global economic headwinds are posing a direct challenge to Singapore's private property market. with data showing foreign home buyers are less attracted to Singapore property scene than before.
The number of foreigners who bought homes in Singapore dwindles last year to the lowest level since the global economic slowdown in the last decade. Even the Chinese home buyers who form the major portion of foreign home buyers in Singapore, were less inclined in the last quarter, Reuters has reported citing the latest data.
Foreigners, including permanent residents, bought 499 homes in the fourth quarter of 2015, Reuters reported, citing data compiled by consultancy DTZ. This leaves the market to depend on local buyers at a time when domestic interest rates are on the rise.
The foreign deals accounted for about 16 percent of total transactions versus more than 30 percent in the third quarter of 2011 just before an additional stamp duty was imposed to cool the market, the report said.
What discourages foreign buyers is the high taxes imposed on their purchases, according to market analysts. The Chinese, among the biggest foreign purchasers of Singapore private homes, bought 151 units in October-December, which was a 40 percent decline from the previous year. That was also down 80 percent from a peak in the third quarter of 2011, according to the DTZ data.
"Chinese money is being attracted by Australia and the U.K.," Alan Cheong, senior director of research and consultancy at Savills Singapore, told Reuters. He added that stamp duties need to be tweaked to a level at which Singapore could capitalise on Chinese funds without attracting too much hot money.
"If we continue to sit by with all these measures, we are just going to miss the boat."