Singapore: Overview
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Massive recovery in Singapore prompts housing bubble fears
After residential property prices in Singapore surged 15.75% in Q3 2009, the government warned against speculation, and the formation of a property bubble. From a six-year low of 953 housing units sold in Q4 2008, sales soared to 10,120 units in Q2, and 11,518 units in Q3 2009.
After strengthening from 2005 to 2007, house prices in Singapore fell in 2008 due to the global financial crisis and the ensuing economic slowdown. As global demand slumped, Singapore’s economy contracted 9.5% during the year to Q1 2009, and there was a 24.9% house price fall during the year to Q2 2009 (24.5% in real terms).
In Q3 2009, the economic cycle reversed, and Singapore’s GDP rose, if only by 0.8% y-o-y. Prospects of an economic recovery combined with low borrowing costs, have set off a massive increase in house prices.
The number of residential units sold in Q2 and Q3 2009 reached 21,638, significantly higher than the 13,642 units sold all year in 2008.
In September 2009, the government imposed policies to cool the housing market including measures that make it more difficult for household to delay their mortgage payments.
"As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted," said the Monetary Authority of Singapore (MAS) in the latest Financial Stability Review released in November 2009. The central bank suggested that more measures might be necessary to prevent speculative measures.
With the government’s renewed efforts to interfere with the housing market, it is now more difficult than ever to foresee house price movements in Singapore.
Foreigners can freely buy condominiums. However, foreigners can still not purchase vacant land and landed properties without permission from the Singapore Land Authority. Non-residential property is not subject to these ownership restrictions.
RENTAL YIELDS
Last Updated: May 07, 2009
Singapore, unchanged at 3.51%
Gross rental yields in Singapore average 3.51%, unchanged from last year.
Buying prices average US$12,295 per square metre, somewhat lower than last year’s average prices of US$13,686. This reflects the rather substantial price falls Singapore has experienced.
The price fall in the 1st quarter this year was particularly bad, with a 14% price drop reported by the Urban Redevelopment Authority, and a 21% price fall over the year (or 22.7% after inflation).
TAXES AND COSTS
Last Updated: Jan 30, 2008
Rental income tax in Singapore is high
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 15.1% | 15.1% | 15.1% |
| Click here to see a worked example | |||
Source:![]() |
Disclaimer | ||
Rental Income: Net rental income earned by non-residents is taxed at 20%. Property tax, insurance, maintenance and repairs are all deductible from gross rental income.
Property Tax: Property tax for rental properties is set at 10% of the annual value (i.e. the estimated rent if rented out). Foreigners pay an additional 10% surcharge.
Capital Gains: There is no capital gains tax.
Inheritance: Inheritance of properties located in Singapore is subject to estate duties at 5% and 10%.
Residents: Residents are taxed on their income at progressive rates, ranging from 3.75% to 21%.
BUYING GUIDE
Last Updated: Nov 16, 2006
Roundtrip buying costs in Singapore can reach 6.45%
The total roundtrip costs are about 3.15% to 6.45%. Stamp duty is around 1% to 3%, and estate agent’s fee at 3% (2% paid by the seller and 1% paid by the buyer). Because Singapore uses a common database of all property listings, there is no sense in hiring more than one agent. To register the property, there are three procedures, typically done in nine days.
LANDLORD AND TENANT
Last Updated: Jun 23, 2006
Singapore favours landlords
With the passage of the Control of Rent (Abolition) Act in 2001, the law in Singapore became clearly pro-landlord.
Rents: The parties can freely determine the rent and the rate of rent increase. Tenants usually pay a security deposit of one month’s rent for every year of lease.
Dispute Resolution: Most landlord and tenant disputes are resolved through mediation or Alternative Dispute Resolution, usually through groups such as the Consumer Association of Singapore (CASE) and Singapore Mediation Center (SMC).
ECONOMIC GROWTH
Last Updated: Oct 16, 2008
Export-dependent economy
Singapore is a small island-nation (only 93 sq. km.) at the tip of the Malaysian Peninsula in Southeast Asia. With a population of 4.6 million, it also has one of the highest population densities in the world. It boasts of a high standard of living (one of the highest in Asia and the world) with GDP per capita of almost US$39,000 in 2008, world-class infrastructure, a highly competitive electronics export industry.
Singapore is remarkable in many ways. But it is heavily dependent on international trade, making it vulnerable to shocks in the global economy. This fact was highlighted by the contraction in 1998 due to the Asian Crisis, the global economic slowdown in 2001 and the current global financial crisis.
The global financial crisis has seriously hit Singapore’s export-dependent economy. By Q3 2008, the economy was officially in recession. Economic growth for 2008 was just 1.15%, significantly down from 7.7% GDP growth in 2007, 7.9% in 2006, 6.4% in 2005 and 8.7% in 2004.
As the global economy has improved, Singapore’s economy has picked up. Nevertheless, Singapore’s GDP is expected to contract by around 3% in 2009, before posting 4% growth in 2010.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Looming housing slump in China
America & Caribbean
The great U.S. housing market crash
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): $11,324 For a 120 sq. m. property, usually an apartment. | Rental Yield: 3.79% For a 120 sq. m. property, usually an apartment. |
| Rent/month: $4,286 For a 120 sq. m. property. | Income Tax: 15.13% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
4.7%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 0.0 Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice. | |
SEPTEMBER 2009
JUNE 2009
- a return of activity in the investment sales market - CB Richard Ellis
MAY 2009
- Finding the silver lining in the dark cloud - Property Guru
- Singapore, Hong Kong amongst Asia’s biggest losers - Property Report Asia
APRIL 2009
- Home sales remain strong - Straights Times
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