Singapore hikes property tax in the most delinquent round of cooling steps

April 28, 2023: -Singapore is increasing taxes for property purchases because increasing prices “could run ahead of economic fundamentals.”

On Wednesday, in a fresh round of cooling measures, the government said that local and foreign customers of residential properties will now have to pay additional buyers’ stamp duties. The changes will take effect, the authorities stated.

This will be Singapore’s third round of cooling measures following similar moves.

Earlier measures taken and September last year had a “moderating effect,” the government stated. Still, “property prices expressed renewed signs of acceleration between resilient demand” in the year’s first three months.

“Demand from locals which purchases homes for owner-occupation has been robust, and there has renewed interest from local and  investors in the residential property business,” the Ministry of Finance, National Betterment Ministry and Monetary Authority of Singapore said.

“If left unchecked, the cost could run ahead of economic fundamentals, risking a sustained price increase relative to incomes.”

The most significant jump is the doubling of duties for foreign buyers from 30% to 60%, helping to “moderate investment demand,” the government stated.

The measures “were not a surprise,” analysts at Citigroup said in a note, but known as the doubling of taxes on “draconian”, given foreign purchases hovers at just 5% to 7% in the past four quarters.

In the previous year’s research report by OrangeTee & Tie, Singapore remains a top investment destination among foreign investors.

“Despite the latest interest rate hikes and cooling measures implemented, foreign buyers purchased luxury condos priced at S$5 million and above this year,” the report stated. 

“Luxury purchases by foreigners and Singapore PRs have almost returned to the last pandemic levels,” in 2019, it added.

Real estate stocks were the significant losers in Singapore on Thursday. City Development decreased 5.74%, UOL Group dropped 4.9%, and Keppel Corp was down 4.4%.