Sales of condos to foreigners down 71% after ABSD increase

The additional stamp duty on foreign buyers (ABSD) has had a significant impact in dampening foreign demand. Condominium sales to foreigners have declined by 71% in the 12 months following its implementation.

Only 306 condos were purchased by non-residents from April 27, 2019 to May 20,23 (as of April 27). This was after the ABSD increased from 30 to 60%.

From May 2022 through April 2023, foreigners purchased 1,064 condos, which accounted for 5.4% of all condo sales. From May 2023 to March 2024, the percentage fell to 1.8%.

Analysts noted a greater drop in foreign buyers in the central core region (CCR) which attracts more foreign investors and foreigners.

In the 12-months leading up the ABSD increase, foreign buyers represented about 14 per cent in condo sales at the CCR. The percentage dropped to 6 per cent over the past year.

Urban Redevelopment Authority data revealed that ABSD increased led to fewer sales. Sales volume in the CCR fell by 36.6% from 4,215 down to 2,672.

The number luxury apartments sold at prices above $10 million in the CCR dropped from 73 units in 2022, to 50 units in 2023. But the average price of these units, $3,800 per sq. foot, remained fairly constant.

Many investors are able to hold their properties and don’t need to sell them at a discounted price. They prefer to lease the property. So it’s not surprising to see prices hold up despite a drop in transaction volume.

Due diligence checks on high-ticket home purchases by financial institutions have become more rigorous, which may be contributing to the slowdown in luxury home sales.

In the last few weeks, there have been more inquiries from foreigners exempt from paying 60% ABSD or making commitments to purchase luxury non-landed properties.

Many of these people are South Asians with US citizenship. Today, foreign buyers are looking for the best value in luxury non-landed residential properties, and not a splurge based on emotion.

ABSD is waived for first-time buyers in Singapore from the US and Switzerland, as well as Iceland, Liechtenstein and Norway.

The ABSD hike has led to a significant drop in Chinese luxury buyers.

Read more: Chuan Park Pricing

Chinese nationals led the foreign buyers of condos in CCR in 2020 with 112 and 15 caveats respectively. PropNex Research’s and URA’s data revealed that the number of foreign buyers fell to 112 in 2020 and 155 in 2021, respectively.

The Singapore Land Authority will secure a buyer’s property with a caveat.

American buyers are now the top foreign buyers on the CCR list, with 110 Caveats filed in 2023 and an additional 130 in 2022. This is up from just 59 caveats registered in 2020 and 90 in 2021.

URA released its latest data on April 26, which showed that private residential sales in the first three-month period of 2024 fell by 2.4%, to 4230 units. This was the third quarter in a row of declining sales.

Between January and March 2024, 43 transactions were made with foreigners. Of these, 22 were with US buyers, 5 from China, 3 from Switzerland, and 2 from Norway. There is no information available on the nationality of buyers for 11 other transactions.

From January to March 2024 foreign buyers accounted 1.2 per cent for all condos sold, new or resold. This is down from the 1.7 percent in the 4th quarter of 2023, and the lowest ever recorded figure since 1995. In the face of a decline in foreign demand for homes, local buyers would dominate.

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