SINGAPORE - The introduction of the additional buyer's stamp duty (ABSD) last December has had its intended effect of shrinking non-permanent resident foreigners' share of total private-home purchases in the first three quarters of this year.
Conversely, Singaporeans have seen a 10.6-percentage point jump in their share of the home-buying pie. PRs' share has risen slightly.
According to Knight Frank's analysis of URA Realis caveats data, foreigners who were not Singapore PRs accounted for just 6.2 per cent of the 23,312 caveats lodged for private homes excluding executive condos in the first nine months - down from their 17.5 per cent share in full-year 2011. In 2010, they accounted for 11.9 per cent of home purchases.
PRs' share has risen slightly in Jan-Sept this year to 15.6 per cent from 13.4 per cent in 2011 and 13.1 per cent in 2010. PRs pay 3 per cent ABSD when buying their second and subsequent residential property here.
For non-PR foreigners, a 10 per cent ABSD rate is payable on all residential property purchases. The same applies to companies.
Singapore citizens also foot 3 per cent ABSD, but only on their third and subsequent residential property. Between January and September this year, they bought 77.4 per cent of private homes transacted, a significant increase from their 66.8 per cent share in 2011 and also surpassing their 72.1 per cent share in 2010.
Knight Frank's analysis also showed that companies picked up just 0.8 per cent of private homes sold in the first three quarters of this year - down from 2.3 per cent in 2011 and 2.8 per cent in 2010.
Commenting on the findings, International Property Advisor CEO Ku Swee Yong said: "The ABSD is doing its job." He also noted that following its introduction, some developers held back launches of luxury residential projects and that may also have led to the thinning in foreign buying this year.
Mr Ku argues that, with the 10 per cent ABSD, the numbers often don't stack up in terms of investing in Singapore property even for foreigners with deep pockets.
"I had a foreigner who told me that paying an additional 10 per cent on the price is equivalent to renting a luxury property, where rental yields are around 2 per cent, for five years. So he continued to rent a GCB instead of buying a luxury condo. He's in Singapore most of the time."
BT Weekend reported recently that in the Sentosa Cove upscale waterfront housing district - the only place in Singapore where non-PR foreigners may buy a landed home, albeit with government approval - some prospective buyers have asked sellers for long option periods of several months in the hope of becoming a Singapore PR and thus qualifying for the lower 3 per cent ABSD rate. Or they would not even have to pay any ABSD if they don't own any other existing residential property here.