Stingy expats hardest hit by Singapore's property cooling measures

Indonesian purchases plunged to a record low in Q2.

Foreigners are more vulnerable to the country's stringent property cooling measures compared to Singaporeans, a study by DTZ Research reported.

The report revealed that the number of non-Singaporean private home purchases plunged in the first half of the year, as expats are adversely affected by the hike in ABSD rates.

In the second quarter, the the share of private home purchases by foreigners fell to 8%, the lowest since Q213 when additional ABSD and TDSR measures were rolled out.

The top four groups of non-Singaporean buyers are made up of Mainland Chinese, Malaysians, Indonesians, and Indians.

Between H2 2013 and H1 2014, the proportion of private home purchases below $1.0m by the top four groups of non-Singaporean buyers rose by a stronger 12.0 percentage-points, compared to the 8.0 percentage-point increase for Singaporean buyers.

In addition, the proportion of private home purchases above $2.0m by the top four groups of non-Singaporean buyers decreased 8.0 percentage-points to 13% in H1 2014.

“In H1, 46% of their private home purchases were below $1.0m while this proportion was much lower at 38% for Singaporean buyers. Although the trend towards units at a lower quantum was evident across most nationalities between H2 2013 and H1 2014, it was strongest for Malaysian and Indonesian buyers. Indian buyers, on the other hand, resisted the overall trend as the proportion of their purchases below $1.0m was similar across the two periods,” noted the report.

This suggests that the impact of the ABSD and TDSR framework is stronger for the non-Singaporean buyer groups, clipping their purchasing power, as a larger proportion of their purchases have shifted towards units with a smaller price quantum.

The report showed that Indonesian buyers are the most price-sensitive of the lot. The share of Indonesian purchases fell to a historical low in the first half, as the bulk of purchases by Indonesians have been by those with foreign residential status.

“Another possible reason for the loss in the share of Indonesian buyers could be due to the recent uptick in the Indonesian property market. Over the past year, the Jakarta residential market has performed much better than Singapore, with average prices rising by more than 20%. Furthermore, the quality of developments in the country has also improved, with many high-end residences available in the capital city. Following the recent presidential election, Indonesia is expected to become more business-friendly and that has also improved confidence in the country,” the report stated.