In April, the sales of newly built private homes in Singapore surged by 80 percent, reaching the highest level in seven months. This significant increase was primarily attributed to the introduction of two prominent projects: Blossoms by the Park near one-north and Tembusu Grand in the Katong area. When excluding executive condominiums (ECs), developers managed to sell a total of 887 units in April, a notable rise from the 492 units sold in March.

According to data released by the Urban Redevelopment Authority (URA), there was a 34 percent increase in sales compared to the previous year. The data revealed that a total of 779 units were made available for sale in April, marking a 36 percent rise compared to March and a substantial 96 percent increase compared to the same period last year.

Analysts noted that the robust sales figures for April indicate that the recent measures implemented to cool the property market had minimal impact on buyers in Singapore.

Based on information provided by OrangeTee & Tie, approximately 84 percent of purchasers for Blossoms by the Park, which was launched shortly after the implementation of the new cooling measures on April 27, were Singaporeans. Similarly, for Tembusu Grand, which was introduced earlier in April, around 90 percent of the buyers were Singaporeans.

Ms. Christine Sun, the Senior Vice President of Research and Analytics at OrangeTee & Tie, expressed surprise at the exceptional sales achieved by Blossoms by the Park. Despite the introduction of new cooling measures, nearly 75 percent of the project was sold within its first month. She further mentioned that the cooling measures might not deter local buyers, especially first-time buyers who are unaffected by the increased Additional Buyer’s Stamp Duty (ABSD).

Ms. Sun added that some buyers anticipate a further increase in prices due to the potential entry of more buyers into the market when interest rates stabilize and with a significant portion of Singaporeans being employed. Additionally, she noted that historical trends indicate that home prices have continued to rise even after each adjustment in ABSD.

Echoing the sentiment, Eugene Lim, the Key Executive Officer of ERA, concurred that Singapore’s private residential market primarily relies on domestic demand. He further emphasized that foreign demand rarely has a significant impact on the overall dynamics of the market.

Lee Sze Teck, the Senior Director for Research at Huttons Asia, provided an example by highlighting that only eight units at Blossoms by the park were purchased by foreigners.

Mr. Lee further mentioned that The Continuum, a freehold project that was introduced in the first weekend of May, experienced strong sales with over 200 units sold on its launch day.Regarding the cooling measures, he acknowledged that there might be a decrease in foreign buyers. However, he anticipated that the overall impact on transaction volume would be minimal. He highlighted that nearly 95 percent of the buyers for these projects are either Singaporeans or permanent residents.

On April 27, Singapore implemented new measures to restrict the property market, which included the introduction of stricter regulations. As part of these measures, the additional buyer’s stamp duty (ABSD) for foreigners purchasing any residential property was doubled to 60 percent.

For Singaporean buyers acquiring their second residential property, the ABSD rate increased from 17 percent to 20 percent. Similarly, those purchasing their third or subsequent residential property would be subjected to a higher rate of 30 percent, up from 25 percent.Permanent residents (PRs) purchasing their second residential property would also face an ABSD rate of 30 percent. PRs buying their third or subsequent residential property would be required to pay an increased ABSD rate of 35 percent, as opposed to the previous rate of 30 percent.

According to Wong Siew Ying, the Head of Research and Content at PropNex, the increased additional buyer’s stamp duty (ABSD) seems to have had an impact on foreign buyers. She mentioned that feedback from their luxury home sales team indicates that while the number of viewings among foreigners remains relatively stable, these investors are less inclined to make immediate purchases, particularly for high-value properties, due to the recent ABSD hike.

However, Eugene Lim from ERA noted that due to Singapore’s stable governance and strong currency, some Chinese buyers may still be willing to proceed with property investments despite the ABSD adjustments

Lam Chern Woon, the Head of Research and Consulting at Edmund Tie, anticipates a decrease in the proportion of foreign buyers in 2023.He mentioned that despite this, there is expected to be consistent demand from American buyers who are exempted from paying the additional buyer’s stamp duty (ABSD) on their initial residential property purchase in Singapore, thanks to the free-trade agreement.

Lam also stated that with a slowdown in foreign demand, the overall market for homebuying is projected to shrink in 2023. Consequently, developers may opt to postpone some of their property launches to the second half of the year, particularly those situated in prime areas.

This story was first published by Channel News Asia