Breaking News: Singapore doubles Property Tax for Foreigners (to 60%)

Singapore's Move to Increase Property Tax Raises Concerns Over the Impact on Locals and the Country's Competitiveness.

Singapore's government has announced that it will increase property taxes on foreigners and second-home buyers in an effort to cool down the red-hot real estate market. The new tax rate for foreigners buying houses will increase from 30% to 60%, with the changes taking effect as of April 27th, 2023.

The move comes amid growing concerns that the influx of wealthy foreigners into the island nation will make it harder for locals to buy homes and compete with other financial hubs. Singapore's real estate sector has remained robust, even as other countries face a slowdown due to high interest rates and inflation. This has partly been driven by an influx of money from wealthy Chinese investors, as well as supply shortages and soaring construction costs during the COVID-19 pandemic.

Breaking News: Singapore doubles Property Tax for Foreigners (to 60%)

The government previously raised taxes in December 2021 and tightened the limit on home loans in September of last year. Despite these measures, property prices rebounded in the first quarter of 2023 as demand recovered. Earlier this year, Singapore also increased taxes on buyers of luxury real estate.

The demand for housing by locals is incredibly strong, and the government has warned that unchecked price growth could lead to a persistent rise in prices relative to income. Citigroup has forecasted that price growth in Singapore will slow to 2% over the next few quarters, but not due to a steady job market. Meanwhile, a report by Knight Frank has highlighted that Singapore's vibrant property market has led to a spike in rents, with the city-state overtaking New York and taking the lead in housing rent growth in the final quarter of 2022.

However, Singapore's housing boom stands in stark contrast to rival financial hub Hong Kong, which has seen an influx of residents during the pandemic. Foreigners buying real estate in Hong Kong are subject to a 30% tax, half the new rate of Singapore. In February 2023, Hong Kong reduced taxes for first-time buyers of real estate valued at around HKD 10 million.

The increase in property taxes in Singapore has sparked concerns among some that it could have a negative impact on the country's competitiveness as a financial hub. However, the government has argued that the measures are necessary to ensure that the housing market remains stable and affordable for locals, and that it will continue to monitor the situation closely. Ultimately, only time will tell whether these measures will succeed in cooling down Singapore's red-hot real estate market.