December Sales of Singaporean Private Homes Hit Lowest Level for Two Years

Figures for December sales of privately owned homes in Singapore fell to their lowest level for two years after new government taxes came into effect. Just 632 units were sold in December, and total sales for 2011 show a fall of 24%.

Experts are not surprised as this result is exactly as they predicted, with potential homebuyers remaining cautious about committing to a purchase as there are fears that property prices could fall.

The Singaporean government has been trying to regain control over property prices since 2009 when it banned interest only loans for certain housing projects, and prevented developers from absorbing interest payments on homes still under construction.

In spite of this property prices still increased by 0.2% during the fourth quarter, although this is the smallest gain for two and a half years.

Additional taxes have also been introduced for foreigners buying property, and this is likely to cause a further drop in demand as foreigners account for 36% of prime property transactions. Foreigners and corporate entities will now have to find an additional 10% for stamp duty.

There is an additional 3% for permanent residents buying a second home, or for citizens purchasing their third residential property. Earlier on last year the government imposed stamp duty of 1% on the first S$180,000 of the property price, with 2% being payable on the next S$180,000 and 3% being payable on the remainder. During the fourth quarter demand for prime property fell with sales down by 44% compared to the previous quarter.