On the other hand, if you're a foreigner with permanent residency in Singapore, the stamp duty is only 5%. But if you then want to buy a second property, the rate jumps to 30% (up from the previous rate of 25%). Companies or trusts that buy any sort of residential property also now need to pay a stamp duty of 65% (up from 35%).
The official message is that these are "pre-emptive measures" to cool demand, which I guess is mostly aimed at mainland Chinese buyers. This is the largest group. Last year, they accounted for about 25% of foreign condo purchases in Singapore. However, the total number of homes purchased by foreigners remains pretty low at just 4.7% (2022). Though first quarter data from this year does suggest the number has increased to about 7%.
On the other hand, if you're a foreigner with permanent residency in Singapore, the stamp duty is only 5%. But if you then want to buy a second property, the rate jumps to 30% (up from the previous rate of 25%). Companies or trusts that buy any sort of residential property also now need to pay a stamp duty of 65% (up from 35%).
The official message is that these are "pre-emptive measures" to cool demand, which I guess is mostly aimed at mainland Chinese buyers. This is the largest group. Last year, they accounted for about 25% of foreign condo purchases in Singapore. However, the total number of homes purchased by foreigners remains pretty low at just 4.7% (2022). Though first quarter data from this year does suggest the number has increased to about 7%.
Even still, how many homes is this?
Based on
this information
, there were 20,909 private home sales in Singapore in 2020. So let's assume this has since increased and the number is, oh I don't know, somewhere around 25,000 homes per year. At 7%, that's 1,750 homes being sold to foreigners each year. Going forward, I don't know how many people are going to be willing to pay the 60% stamp duty, but presumably some will still do it.
If we pick a random number and assume that this higher tax wipes out 80% of the foreign demand, then that's an additional 1,400 homes for locals and only 350 homes going to foreigners each year. Maybe this is something?
The Prohibition on the Purchase of Residential Property by Non-Canadians Act -- which came into effect in January of this year and bans foreigners from buying residential real estate in the country for two years -- is weird.
We can debate whether banning foreigners from buying residential real estate is really helpful for housing affordability and if it's the most impactful place to focus our attention (and we have talked about this many times before), but the part that is particularly odd is this feature here:
...the law’s definition of residential property includes land that is zoned for residential use or mixed use, which covers huge swaths of commercial land across the country. As well, an entity is deemed foreign if a non-Canadian owns a minimum of 3 per cent of the entity.
What this means is that the following scenario is now technically a problem (not actual legal advice!):
You own a commercial property with zero homes
You have long-term commercial leases in place that also generally preclude you from building new homes in the foreseeable future
The zoning of your property allows for residential uses (which you like having in your back pocket)
And your cousin from Italy owns 3% of the entity that owns the real estate
This is a scenario where residential homes do not exist and they are unlikely to exist any time soon. It seems clear cut, but I suppose one could argue that it's exceedingly onerous to try and figure out which sites are soft sites and could actually be developed with new residential. And so if you have the potential to build and then own residential, you should be regulated as if you might ultimately own some of it one day.
But even here, I don't know why we would want to restrict the supply side of the housing equation. If you're a developer in Canada where housing is known to be kind of expensive and you want to build more of it for Canadians, isn't that a good thing? And isn't it also a good thing if we can get some non-Canadians to help pay for these new homes?
, there were 20,909 private home sales in Singapore in 2020. So let's assume this has since increased and the number is, oh I don't know, somewhere around 25,000 homes per year. At 7%, that's 1,750 homes being sold to foreigners each year. Going forward, I don't know how many people are going to be willing to pay the 60% stamp duty, but presumably some will still do it.
If we pick a random number and assume that this higher tax wipes out 80% of the foreign demand, then that's an additional 1,400 homes for locals and only 350 homes going to foreigners each year. Maybe this is something?
The Prohibition on the Purchase of Residential Property by Non-Canadians Act -- which came into effect in January of this year and bans foreigners from buying residential real estate in the country for two years -- is weird.
We can debate whether banning foreigners from buying residential real estate is really helpful for housing affordability and if it's the most impactful place to focus our attention (and we have talked about this many times before), but the part that is particularly odd is this feature here:
...the law’s definition of residential property includes land that is zoned for residential use or mixed use, which covers huge swaths of commercial land across the country. As well, an entity is deemed foreign if a non-Canadian owns a minimum of 3 per cent of the entity.
What this means is that the following scenario is now technically a problem (not actual legal advice!):
You own a commercial property with zero homes
You have long-term commercial leases in place that also generally preclude you from building new homes in the foreseeable future
The zoning of your property allows for residential uses (which you like having in your back pocket)
And your cousin from Italy owns 3% of the entity that owns the real estate
This is a scenario where residential homes do not exist and they are unlikely to exist any time soon. It seems clear cut, but I suppose one could argue that it's exceedingly onerous to try and figure out which sites are soft sites and could actually be developed with new residential. And so if you have the potential to build and then own residential, you should be regulated as if you might ultimately own some of it one day.
But even here, I don't know why we would want to restrict the supply side of the housing equation. If you're a developer in Canada where housing is known to be kind of expensive and you want to build more of it for Canadians, isn't that a good thing? And isn't it also a good thing if we can get some non-Canadians to help pay for these new homes?
Here is an interesting article from the Financial Times talking about the quiet move of people and companies from Hong Kong to Singapore. I say quiet, because apparently Hong Kong-based companies are reluctant to overtly signal that they are setting up offices and moving some of their executives out of the city, in case that starts to upset people over in Beijing.
But the real estate market in Singapore seems to be benefitting from some of these macro trends, as well from the city-state's handling of the coronavirus. This is despite there being a 25% stamp duty tax on foreign property purchases (US nationals and a few others are exempt) and despite the fact that the economy shrank in the second quarter of this year by the largest percentage (13.2%) since independence in 1965.
According to FT, there were 2,362 residential property transactions in the core central region of Singapore in the first 9 month of this year. This compares to 1,962 transactions for the same period last year. Of these total sales, 260 residential homes were sold to foreign nationals this year (~11%), compared to 316 last year (~16%). While this is obviously a decline, including a decline in the percentage sold to foreign nationals, it still feels pretty significant given that the borders were presumably closed, or largely closed, earlier this year.
Apparently 75% of the above 260 homes were sold to buyers from either mainland China or Hong Kong. I don't know how this percentage compares to last year. But the narrative out there right now is that it is up (along with office leasing by foreign companies) and that Singapore is a pretty safe place to put your money right now.
Here is an interesting article from the Financial Times talking about the quiet move of people and companies from Hong Kong to Singapore. I say quiet, because apparently Hong Kong-based companies are reluctant to overtly signal that they are setting up offices and moving some of their executives out of the city, in case that starts to upset people over in Beijing.
But the real estate market in Singapore seems to be benefitting from some of these macro trends, as well from the city-state's handling of the coronavirus. This is despite there being a 25% stamp duty tax on foreign property purchases (US nationals and a few others are exempt) and despite the fact that the economy shrank in the second quarter of this year by the largest percentage (13.2%) since independence in 1965.
According to FT, there were 2,362 residential property transactions in the core central region of Singapore in the first 9 month of this year. This compares to 1,962 transactions for the same period last year. Of these total sales, 260 residential homes were sold to foreign nationals this year (~11%), compared to 316 last year (~16%). While this is obviously a decline, including a decline in the percentage sold to foreign nationals, it still feels pretty significant given that the borders were presumably closed, or largely closed, earlier this year.
Apparently 75% of the above 260 homes were sold to buyers from either mainland China or Hong Kong. I don't know how this percentage compares to last year. But the narrative out there right now is that it is up (along with office leasing by foreign companies) and that Singapore is a pretty safe place to put your money right now.
