Expats who are looking to buy property in Singapore will now be required to pay even higher buyer’s stamp duty as a result of the Singapore government’s latest round of measures aimed to cool the housing market.
The new taxes, which were introduced on Monday, entail that foreigners and corporates who wish to purchase a residential property in Singapore will be required to pay a stamp duty of 15% of the purchase price, which represents a 5% increase from the stamp duty announced last year.
Singapore citizens and permanent residents will also be required to pay higher stamp duty when purchasing residential properties, with permanent residents now facing a stamp duty of 10% of the property value and Singapore citizens being required to pay 7% on any second homes they buy.
“We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road,” said Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam.
The latest measures were introduced overnight in response to rising property prices throughout the island. The latest figures from the Urban Redevelopment Authority show that the prices of private homes increased by 1.8% in the fourth quarter of 2012, an increase of 0.6% on the previous quarter. Government HDB properties also rose in value by 2.5%, which represented the highest growth quarter on quarter since 2007.
One of the underlying explanations for the continued increase in property prices in Singapore is the cheap cost of borrowing. Interest rates in the country have fallen to record lows and many banks now charge as little as 1% per year on housing loans. “Interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market,” said Shanmugaratnam.
The government disclosed that the increases in stamp duty would not be permanent and would be reviewed on an ongoing basis in response to property market developments.
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