Why do people trust Singapore’s real estate so much? First, we understand housing is a commodity, a necessary purchase.
However, why are foreigners still buying property in Singapore despite seemingly high prices?
There might be three reasons why are so.
There are namely political stability, economic growth, and real estate regulations.
Today, I will pin my opinion on the real estate regulations in Singapore.
Why are real estate regulations necessary?
Foreigners are taxed 30% of the property price when purchasing any real estate in Singapore.
A foreigner would be taxed an extra $300,000 for a $1,000,000 property.
The average percentage of foreigners purchasing new condominiums during the pandemic was 10%.
The purpose of real estate regulations (cooling measures) is to keep property prices reasonable and sustainable.
These cooling measures also act as a cushion for a price plunge during a downtrend in the market.
This contributes to the level of trust local and foreign investors have in Singapore’s real estate market.
We want a stable property market to make it affordable to homeowners and prevent speculation in the real estate market.
The three most famous ones are Total Debt Servicing Ratio (TDSR), Additional Buyer Stamp Duty (ABSD), and Loan-To-Value Ratio.
Therefore, this leads to safe borrowing, commitment, and leveraging, respectively.
Click here to learn more about Additional Buyer Stamp Duty (ABSD).
To learn more about Total Debt Servicing Ratio and Mortgage Servicing Ratio (MSR), click here.
I hope this blog post has shed some light on the necessity of regulation in the property market.