What happens when additional property related taxes are levied on foreigner buyers? Well, it’s supposed to start deterring foreigners from buying indiscriminately. Singapore introduced cooling measures in July 2018 because it did not want property prices to rise indiscriminately. These included raising stamp duties for second homes, tightening loan-to-value limits for housing loans granted by financial institutions and making it more expensive for foreigners to enter the market. (Read more in themalaysianreserve.com here)
This has helped to slow down the property price increase. Look at the image below to understand that prices are still rising yeah.
Article in thedgemarkets.com Article says that there are Chinese families who are shopping for luxury apartments in Singapore instead of having traditional reunion dinners. One reason for this is because of the current political unrest in Hong Kong which has not shown any signs of stopping. Thus, Singapore as the other Asia’s major financial centre is in focus. Rich foreigners are NOT deterred by the higher taxes which are levied on them.
Georg Chmiel, executive chairman of China-based property portal Juwai.com said, “Wealthy mainland Chinese are seeking a way to safely diversify and guard a portion of their wealth in offshore assets.” According to List Sotheby’sInternational Realty analysis of government data, Chinese nationals are set to top Singapore’s list of foreign buyers in 7 out of 10 years. Chmiel also added of Chinese buyers thinking of property in Hong Kong, “Whereas a year ago they were enthusiastic, mainland buyers today are cautious or downright skeptical.” “Either they’re postponing their purchase in Hong Kong or deciding against it altogether.” Article in thedgemarkets.com
I have written about this many times but I think it’s always good to remind everyone that property buying is not about the price. It’s about the economy. A growing economy, a robust one should spur more investments and it will eventually help the property market. The economy should determine the property price, more natural. Without a corresponding economic growth, the property market growth (whether transactions or even price increase) should not / will not be sustainable.
As for Singapore as an advanced economy, it may have just grown 0.7% in 2019 but it is considered a safe haven because of the pro-activeness of government policies. Investors buying into Singapore are not worried as long as they have a longer term view about their investments. This is one reason why they are buying and it has nothing to do with the fact that Singapore is already considered one of the most expensive cities in the world. As per The Economist Intelligence Unit, it is ranked no.1 most expensive among the cities in the world. I do hope those pushing Malaysian properties to understand this fact too. Happy attracting.
Next suggested article: Is this are XXXX worth buying? How to answer such a question yeah