Singapore Property Market Driven by Foreign Money- Myth Busted

March 12,  2021


SINGAPORE


Foreign property purchases have been significant factors in real estate markets globally. As an international travel and business hub, Singapore has been one of the top spots where foreigners love to come to snap up their desired properties, given the country’s reputation for being a political, economic and social safe haven. Moreover, foreign buying of properties on our sunny island has led to the common impression that foreign money drives the Singapore property market.

However, upon closer examination, there is more to than meets the eye.  After years of low mortgage and interest rates (prior to COVID-19), foreigners have not been the only factor supporting property prices. Neither are foreigners the main driving forces of the Singapore property market. Cheap money (interest rates are the price of money) and rising incomes are also boosting property prices.

Moreover, the coronavirus outbreak in 2020 that has resulted in worldwide travel restrictions and lockdowns further counters the myth of foreign domination of the Singapore property market. When the 2-month long circuit breaker in Singapore halted home viewings and closed show flats down, the number of private apartments purchased by foreign buyers dropped to a 17-year-low to 742 units. Based on government data, Singaporeans comprise the largest proportion (80.2%) of property buyers, with more locals decreasing their investments overseas due to the relative stability of the Singapore economy and currency compared to other markets. Also, as the number of Singaporean wealthy buyers increase, the demand for property is set to remain and rise. A 2020 UBS/PwC Billionaires Insights report showcased how billionaires bought many high-end properties as their collective fortunes increased to US$10.2 trillion during the coronavirus crisis. Henceforth, our luxury home segment enjoyed a boost despite the circuit breaker and coronavirus sanctions. With the widespread purchasing spree among locals leading to a spiral in property prices, the government has had to step in to implement cooling down measures, such as increasing the stamp duties for foreign buyers.

That being said, with political uncertainty in other property hubs like Hong Kong, foreign buyers, particularly those from the middle class in China, still view Singapore as a desired hotspot for their overseas properties. Having said that, local demand remains sturdy as unstable economic conditions worldwide prompt many to expand their investments in real estate assets in Singapore, including residential properties that could yield stable returns in the long haul. If the Singapore economy rebounds with greater momentum this year due to its capacity to stem the spread of COVID-19, the real estate market is also set for a stable and gradual recovery.