Property cooling measures freezes foreign buyers activity

This has effectively reversed private home price increases.

Property cooling measures have effectively brought down the number of private properties bought by foreigners by nearly 23% quarter-on-quarter which made prices in the private residential property market dropping by 0.2%, property analysts said.

Additionally, Singapore Residents and Permanent Residents were ‘encouraged’ by the cooling measures introduced in April to prioritise buying for occupancy or risk higher rates.

“As expected, price moderation and dips in transaction volumes were observed in Q2 2023. Singapore Citizens can now be described as having a single ‘bullet’ when buying a home, following the April 2023 cooling measures; the raised ABSD rates also encourage them to prioritise buying for occupancy," Dr Tan Tee Khoon, Country Manager – Singapore at PropertyGuru said.

Christine Sun, Senior Vice President of Research & Analytics said that some buyers continue to face high borrowing costs as interest rates remain elevated. 

“Sellers are also facing more pressure as supply gradually builds up with more private home completions. The stock of completed private residential units has increased by 4,227 units in Q2 2023, up from an increase of 2,864 units in the previous quarter,” Sun said.

Meanwhile. Mark Yip, CEO of Huttons Asia said that following the cooling measures, the number of non-landed residential homes purchased by foreigners reduced significantly in June. 

“Based on caveats, there are 27 purchases by foreigners in June which translate to an estimated 2.5% of total non-landed transactions. This is a significant drop compared to 112 in April 2023 and 66 in May 2023,” Yip said.

Looking forward, Yip expects the proportion of purchases by foreigners to be around 2% while that by Permanent residents may increase to as high as 20% due to the cooling measures.

Sun said she expects buying activities to persist in the second half of the year as more private homes are completed.

“With more housing supply coming onstream, we estimate that overall property prices will continue stabilising, and the full-year growth could be slower at around 4% to 6% compared to 8.6% in 2022 and 10.6% in 2021,” Sun said.