PropNex’s OYY rental, HDB resale, landed, commercial and industrial segments are unlikely to be much affected by the latest cooling measures, barring unforeseen circumstances.
Citing its “resilient business model” with “diversified rental streams”, the SGX-listed property agency notes that the above segments accounted for around 40% of its total revenue for the FY2022 ended Dec 31, 2022.
“As Singaporeans and permanent residents (PRs) account for a lion’s share of private home sales at 95% in FY2022, we do not expect the doubling of the additional buyer’s stamp duty (ABSD) rate for foreigners to severely impact the overall market and our other major revenue segments of project marketing (new launches) and private resale,” the agency writes in its statement on April 27.
On April 26, the Singapore government announced that it will be increasing its additional buyer’s stamp duty (ABSD) rates for both local and foreign buyers. From April 27 onwards, Singapore citizens have to pay an ABSD of 20%, up from the previous 17% on their second residential property. They will have to pay 30% on their third and subsequent property, up from the previous 25%.
“With the latest round of cooling measures, the government is moving early to rein in any exuberance that may be building up in the residential property market, seeing that overall private home prices rose by 3.2% q-o-q in 1Q2023, as per the Urban Redevelopment Authority’s (URA) property price index flash estimates,” says PropNex.
They add that the HDB resale market is showing signs of slowing price growth and that the latest move, which ensures that private home prices do not surge ahead, will prevent prices from diverging too greatly. The move will also ensure that private homes remain within the reach of those looking to upgrade from their HDB flats and first-time buyers.
PropNex adds that it expects foreign buyers to now focus on opportunities within the commercial property and shophouse property segments following the “very restrictive” 60% ABSD rate for foreigners.
That said, it adds that foreigners only account for a small proportion of private homes in Singapore at 4.4% in 2022, which is substantially lower than the numbers seen in 2010 and 2011.
While PropNex sees some slowdown in the sales of super-luxe homes of over $10 million, which tend to interest foreign buyers, Singaporeans and PRs still account for a “large share” of such transactions.
“In the year to April 18 period, 64% of private homes sold for at least $10 million were purchased by Singaporeans, 17% by PRs, 14% by foreigners and about 5% by companies,” says PropNex.
Housing demand from Singaporeans and PRs are expected to remain “fairly intact”, with the agency expecting a “healthy take-up rate” for EL Development’s upcoming Blossoms By The Park in One North.
The launch previewed on April 14 and is slated to launch on April 29.
On this, the property agency is expecting new private launches to proceed as scheduled with developers to price units “sensitively” on the back of the latest round of property cooling measures.
The “sensitive” pricing will take into consideration buyers’ “cost burdens” and the prevailing market conditions, notes the agency.
Shares in PropNex closed 14 cents lower or 6.51% down at $2.01 on April 27.
