Singapore isn't exactly saying that foreigners can't buy homes there, but it did just increase the stamp duty on purchases by foreigners to 60%. So it is saying that maybe you shouldn't do it, unless you want to pay a lot of tax.
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)
