Yesterday, a study by DTZ research shows that the % of private property sold to foreigners (non-PR) has reached a record high of 16% up from 15% in the last quarter. One of the potential reasons I mentioned in a previous post for rising prices is the buying by foreigner investors and speculators. The DTZ shows that a higher of % foreign buying is found in higher end properties costing more than $1.5M and for lower end property below $500K the % of Singaporean buyers (citizens) actually rose from 72% to 80%. Singaporean buyers fell from 70% to 67% of all buyers.
Basically, the data shows Singaporeans are increasingly being squeezed down (to the lower end) and squeezed out of the property market. For land scarce Singapore with the highest income inequality among developed countries, how should we view property? Is it an investment like Singapore stocks which we should allow foreign investors to enter market?
Many countries have curbs on foreign buying even when the country has a lot more land per capita compared with Singapore. While the govt restrict foreigners from buying HDB, the impact of foreigners buying private property has caused middle class Singaporeans to be squeezed out and this has pushed up demand for resale flats. Purchase of landed property used to be restricted and foreigners had to apply for permits which were not granted unless there is good reason. However, in recent years, such permits are granted routinely.
There are several things govt can do about this:
1. Restrict foreign buying. Foreigners can always rent if they need a place to stay. It does not make sense for land scarce Singapore to allow foreigners to use our housing market as a form of investment.
2. Require foreigners to sell to Singaporeans. Here is a rule that is implemented in Australia which has much more land than Singapore- allow foreigners to buy but they have to sell to locals.
3. Impose higher levies/taxes on foreigners buying Singapore property.
4. Limit the % of new property that can be sold to foreigners.
While there are ways around these rules such as appointing a local proxy to get around them like what some Singaporeans do in Indonesia, putting them in place with deter most foreign investors.
16% of private home buyers in S'pore in Q1 are foreigners: DTZ
25 May 2011 0047 hrs (SST)
URL : http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1130960/1/.html
SINGAPORE : Foreign buyers accounted for 16 per cent of private home
purchases in Singapore in the first quarter of this year, setting a new record
high, according to real estate consultant DTZ Research.
The previous high of 15 per cent was recorded in the fourth quarter of 2007.
DTZ defines foreign buyers as non-Singaporeans and non-permanent residents.
Singaporeans' share of private property purchases fell to 67 per cent in
the first quarter, from 70 per cent in the previous three months.
The proportion of mainland Chinese among non-Singaporean buyers - comprising
foreigners and PRs - hit a new record high of 24 per cent in the first quarter
It is the first quarter that Chinese nationals are the top
foreign purchasers of residential properties in Singapore.
"The residential market appears to have taken the January 2011 cooling measures in
its stride," said Ms Chua Chor Hoon, head of DTZ South East Asia Research.
"However, local concerns about high housing prices and the influx of
foreigners that were magnified during the recent General Election will be a
catalyst for the review of immigration and housing policies, which could dampen
demand in the residential market in the coming months," she added.
According to DTZ, small units continue to be popular among home buyers,
especially the HDB upgraders.
The proportion of buyers with HDB
addresses who bought units below 1,000 square feet increased 5 per cent in Q1
2011, compared with a 2 per cent increase among buyers with private addresses.
DTZ's analysis also revealed that a higher proportion of foreigners
bought into the high-end market during the quarter.
costing S$1.5 million and above, the proportion of purchases made by foreigners
increased the most - from 17 per cent to 21 per cent.
below S$500,000, the proportion of transactions made by Singaporeans was 80 per
cent, up from 72 per cent a quarter earlier.
This reflected the smaller
budget among Singaporean buyers. "At the lower end of the price scale, locals
are the main drivers of demand," said DTZ.