Singapore government has targeted Chinese homebuyers as more and more opt to live in the city to escape Covid lockdowns in China. The Government announced a hike in property tax, doubling it to 60%. The new tax regime has considered every loophole that can be used. That’s why trusts will now have to pay 65% tax for buying a residential property.
The move comes in right before the election year while property taxes are a hot topic. Singapore’s housing market is experiencing a boom while property prices are falling from Hong Kong to London.
China has always been a key source of liquidity for the markets in Singapore. Ultra-rich Chinese have been moving into the city ever since the CCP pushed for stricter Covid norms. The prices of luxury properties in Singapore are expected to rise by 5% this year. Home prices have been increasing in Singapore consistently for 12 quarters now.
The rules are not expected to affect the property markets in anyways because foreigners only account for 4.4% of property sales in Singapore. The government believes that the new law will impact only 10% of property transactions. The new tax regime, however, will increase the number of renters as foreigners will now wait till they become permanent residents to buy properties.
China made up 6.9% of foreign purchases of private apartments in Singapore. They are the single largest group of investors by nationality in the housing market. With mainland China opening up investors expect more money to pour into Singapore’s real estate market.
The government wants to benefit from this renewed interest in the city. They’re moving cautiously, in an effort to ensure permanent residents are not harmed by this almost punitive tax hike.
