Will curbs to foreign buying be implemented?
As more foreigners make Singapore their home, some Singaporeans are growing worried that their presence will further reduce limited housing supply and push prices up and out of their budgets.
The figures
The percentage of foreigners buying private homes is slowly but surely rising. In the first eight months of 2011, one-third of condominium buyers were non-Singaporeans and permanent residents (PRs), compared to last year's 28 per cent.
Business Times recently reported that foreigners, excluding PRs, made up 20.1 per cent of the total number of uncompleted private homes in Q3, up from 16.3 per cent in Q2. Among all private housing purchases, foreigners, excluding PRs, accounted for 16 per cent in the first half of 2011, from 12 per cent in 2010.
The new trend
In the past, as foreigners generally went for up-market homes in districts 9-11, their purchases had little effect on the average Singaporean buyer, said Dennis Wee Group director Chris Koh. However, recent times unveiled a fairly new trend where non-Singaporeans purchase mass-market homes (houses under $1 million) — a segment that previously received little interest from them, and are well sought after by Singaporean upgraders.
Foreign share of such housing reached 28 per cent in the first nine months of 2011. The figure was 22 per cent last year and 19 per cent in 2009, according to caveats lodged with the Urban Redevelopment Authority.
The societal effect
Some Singaporeans have begun associating the growing number of foreign mass-market home buyers with their soaring prices. The segment saw an 18 per cent jump last year, and another 6 per cent increase in the first nine months of 2011.
Concerned locals are becoming more territorial and voicing their displeasure. Yahoo! user San Mao said, "Foreign ownership in Singapore need[s] to be [tightened] further."
Yahoo! user Singapore Son agreed, "The fact [is] that foreigners, not only take jobs away from Singaporeans, they also push prices up for properties, transport and generally, the cost of living."
Suggested solutions
In a bid to pacify Singaporeans, decision-makers are considering the implementation of curbs to restrict foreign purchase of private homes. Last month, MP for Holland-Bukit Timah GRC Christopher de Souza made such a suggestion, citing that in Australia, foreigners are only allowed to buy new properties and sell them to citizens.
More finance-related suggestions include placing caps on the number of mortgages or shrinking the proportion of a property's value that can be borrowed. Some industry insiders suggested the introduction of a capital gains tax for foreigners who make gains from selling a private property.
Few realise, however, that there already are restrictions for non-Singaporean home buyers. For instance, foreigners are only allowed to purchase landed homes in Sentosa Cove. PRs can buy landed homes in other parts of Singapore, but only with approval. Resale HDB flats are reserved for Singaporeans, and PRs who meet a stringent set of criteria. The private condominium market offers a level playing field for both citizens and foreigners: both locals and foreigners are subject to a sellers' stamp duty of up to 16 per cent.
Complications
Knight Frank group managing director Danny Yeo felt that restrictions should only be reserved for those neither living nor working in Singapore, not for PRs and long-term residents.
National Development Minister Khaw Boon Wan explained last month that rising housing prices are not solely due to foreign purchases, and that other factors include low interest rates and Singapore's strong economic leanings. It is vital that housing policies do not hurt the economy, he said.
Still, insiders feel that authorities will try to balance pleasing Singaporeans and upholding its economic emphasis by implementing calibrated curbs that will only affect a certain group of foreigners.
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