ABSD the main cause of drop in foreign purchases

December's property cooling measures have indeed affected non-permanent resident (PR) foreigners buying in the private housing sector.

According to The Straits Times, foreigners bought 385 units in November 2011, covering new sales, resales and subsales, which translate to a 16 percent slice of the entire market, excluding executive condos (ECs).

But figures dropped to just 53 and 96 units in January and February respectively, reducing their market share to only 6.5 percent, based on Savills analysis of data from the URA (Urban Redevelopment Authority).

Back in 2010, foreign buyers held a 12 percent share of the market, which rose to a record 17 percent last year.

Experts attribute the steep drop in foreign purchases to the 10 percent ABSD (additional buyer's stamp duty). Foreigners may have had hesitations as to whether Singapore would remain an attractive investment destination despite the cooling measures.

The slew of policy changes may have also dampened demand, said Mr Ku Swee Yong, Chief Executive of International Property Advisor.

He added that some of his Malaysian clients plan to invest in commercial space or smaller homes that have lower prices to avoid the stamp duty or pay a lower fee.  

Meanwhile, Tan Kok Keong, Research and Consultancy Head at OrangeTee, noted that the ABSD was clearly the main cause, given that no other major issue came in between November and February.

However, some experts hope the decline will only be a temporary lull as foreign purchasers adapt to the higher tax. Alan Cheong, Director of Research and Consultancy at Savills, said foreign demand will eventually move up in due time.  Related Stories:Condo prices down but landed home prices edge up

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