The additional buyer’s stamp duty could become a permanent fixture in the residential property market even after prices cool, according to Bank of America Merrill Lynch.
Chua Hak Bin, an economist at the bank, said cooling measures implemented in 1996 to differentiate between local and foreign buyers were eventually repealed but this new measure is different.
“The 1996 measures were seen as more of a move to cool the market, but this round seems more like a political move,” he said.
He noted that the latest measures aim to differentiate between the rights and privileges of Singaporeans, permanent residents (PRs) and foreigners.
Under these rules, foreigners are required to pay an additional 10 percent stamp duty when acquiring residential property. PRs who purchase second and subsequent homes and Singaporeans who buy third and subsequent homes have to pay an extra three percent stamp duty.
“The measures come at a time when foreigners make up around 40 percent of the luxury market and are seen to be making headway into the mass-market home segment. Singapore is also seen as a good place to park capital,” he said.
Meanwhile, Sing Tien Foo, Associate Professor at the National University of Singapore’s (NUS) department of real estate, cautioned that the effects of the new measures could be disastrous if the Eurozone debt crisis continues.
“While the measures will help stabilise the market and eliminate speculators, it will also block liquidity from entering the property market,” he said, adding that “this may result in a sharp downward spiral of prices.”
Source : PropertyGuru – 19 Dec 2011