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S'pore is second priciest for foreign home buyers
But annual cost of owning a property in Singapore is still favourable
By: Annabeth Leow
REGULATORY measures taken to cool the property market have raised the purchase costs of luxury residential developments to the second-highest in the world for foreign buyers.
In property consultancy Knight Frank's Global Development Insights second-quarter report, Singapore was second only to Hong Kong when it came to the purchase cost of new-build prime residential property.
The elevated costs are largely due to the increase in associated fees and taxes, as actual property prices have dropped 3.3 per cent since a year ago.
This comes after the cooling measures in January - the seventh round in four years.
It saw the additional buyer stamp duty for foreigners increased from 10 per cent to 15 per cent, and also tightened loan to value ratios by 10 to 20 percentage points. Singapore's total stamp duty rate for non-residents, which is 18 per cent now, is the highest of all 15 cities surveyed by Knight Frank.
A month later, the government announced in its annual Budget that property taxes for high-end residential properties will be raised over the next two years, to up to 16 per cent.
These steps were taken to cool a hot property market where private home prices have gone up by more than 60 per cent over the past four years.
Said Knight Frank editorial and research executive Oliver Knight: "With demand for prime property only likely to rise, we might expect a growing trend towards attempts at property market micro-management by governments."
However, the annual cost of owning a property in Singapore is still favourable for foreign buyers. The annual cost for a US$3 million residence is US$3,900, which puts Singapore in the cheapest third of global cities, behind Hong Kong, Monaco, Nairobi, Cape Town and London.
Hong Kong and Monaco tied for cheapest spot because non-resident buyers there are not required to pay any ongoing property, land, or council taxes at all.
Ms Alice Tan, associate director and head of research at Knight Frank Singapore, said: "Despite the Additional Buyer's Stamp Duty payable by foreigners, Singapore's residential property remains attractive given the country's stable fundamental and conducive living environment."
Still, the proportion of non-resident foreign buyers making private home purchases fell to 6.3 per cent last year, down from 17.6 per cent in 2011, and property analysts have warned that further shrinkage is to be expected.