Singapore’s market cooling measures have been among the most effective on a global level. An Additional Buyer’s Stamp Duty (ABSD) of 15% must be paid by foreign buyers, while Singapore's permanent residents are levied an additional 5% for their first property and 10% for their second and subsequent properties.
Singapore citizens face additional duties of 7% for their second and 10% for their third properties and subsequent properties. In a bid to prevent market speculation and the ‘flipping’ of properties, a Seller’s Stamp Duty applies, at up to 16% of the consideration value if sold within one year, falling to 4% if sold in year three.
These measures, coupled with a general slowing in Singapore’s economy has resulted in a significant reduction in transaction levels and falling prices in the prime residential market. In common with high-end markets across the globe, Singapore’s prime market has been the one most favoured by international buyers while average mainstream property remains predominantly domestic.
At the end of Q2 2015, prices are down 6.7% among all private property from a high of Q3 2013, while total annual transaction levels are down 53.8% over the same period.
By contrast the mainstream market has continued to grow, driven by domestic owner-occupier demand. Singapore is unusual in that 80% of the resident population live in publically governed and developed housing, managed by the Housing and Development Board (HBD). Unlike most social housing in the developed world, which is rented, 95% of HBD properties are owner-occupied and sold on 99 year leases. They may be re-sold freely on the open market (to citizens) once minimum occupation requirements have been met.
With no changes to the current government curbs or cooling measures on the horizon, the private residential market is expected to remain soft. Further falls may be seen in the prime markets. This could present buying opportunities as underlying demand for real estate is strong, as evidenced by commercial property markets. The prime office market in Singapore remains buoyant (the result of a dearth in new supply since 2005) and prime office rents are forecast to increase by 3% in 2015 as a result.