Singapore hikes property tax sharply – What it means for home buyers

If you want to buy a property in Singapore, you would have to pay more.

The Singapore government has decided to raise property taxes in a bid to cool its booming housing market.

The government is increasing stamp duties for second-home buyers and foreigners purchasing private property, a Bloomberg report said. For foreigners who want to buy a home, the tax rate has doubled from 30 percent to 60 percent.

Singaporean authorities are concerned that an influx of wealth into the city is hurting affordability for locals and its competitiveness as a financial hub.

According to a report by Knight Frank, the exuberant property market has led to a surge in rents, with Singapore pushing New York off the top spot for the strongest growth in residential rents in the last quarter of 2022.

Christine Sun, senior vice president of research & analytics at OrangeTee & Tie, told Reuters that it could be a “freezing measure” for foreign buyers.

As per several analysts, the move could be in anticipation of more Chinese buyers — who make up the bulk of foreign luxury home purchases — in the coming months.

According to Bloomberg, Singapore’s property sector has remained buoyant even as many other countries face slowdowns due to soaring interest rates and inflation, partly due to an inflow of money, especially from the wealthy Chinese. 

The surge in property tax, however, may be good news for Hong Kong, say experts. They add that Singapore’s rival city may become more attractive for foreign investments. Notably, Hong Kong has been seeing an exodus of residents and investors following the Covid-19 pandemic.

This is not the first time that Singapore has tried to step in to cool its property market.

Singapore’s latest measures come after it increased stamp duties on foreigners from 30 percent from 20 percent in 2021. The city-state also tightened home-loan limits in September 2022. But these measure do not seem to have had an impact on the property market. 

Sun told Reuters that while prices may slow for a while, the super-rich may continue to buy, keeping prices elevated.

Now, only time will tell if Singapore’s property boom continues or the new measures will keep the market in check.