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Last Updated: Jun 24, 2016




Singapore housing prices continue to fall, amidst weak economic growth. The private residential property index fell by 3.37% during the year to Q1 2015, its ninth consecutive quarter of y-o-y price falls, based on figures from the Urban Redevelopment Authority (URA). When adjusted for inflation, house prices fell by 2.35% during this period.

During the latest quarter (i.e. q-o-q in Q1 2016), residential prices fell by 0.71% (-0.43%% inflation-adjusted).

All regions also saw falling house prices:
  • In Core Central Region (CCR), prices of non-landed private residential properties fell by 1.8% (-0.8% inflation-adjusted) y-o-y to Q1 2016.
  • In the Rest of Central Region (RCR), property prices were down by 2.6% (-1.6% inflation-adjusted) over the same period.
  • In Outside Central Region (OCR), property prices fell by 4%(-3% inflation-adjusted) during the year to Q1 2016.

Prices of high-end, non-landed homes fell slightly by 0.2% q-o-q in Q1 2016, to an average of SGD2,239 (US$1,652) per square metre (sq. m.), according to Savills.

The continued decline in house prices is the result of deliberate government policy. Before and after the global economic crisis, Singapore’s property market surged, and Singapore experienced an amazingly overheated market. The residential property price index rose 38.2% during the space of only one year to Q2 2010  (34% inflation-adjusted).

The Singapore government sensibly began to take steps, and when these turned out to be not enough, took further measures.

In October 2012 it limited the mortgage term to 35 years, and lowered loan-to-value (LTV) ratios to 60% for loans longer than 30 years (or loans stretching beyond age 65). This was only the first of 10 rounds of property-market cooling measures.

Seller’s stamp duty (SSD) was then introduced on owner-occupied housing sold within a year of purchase. A little later, the stamp duty was revised upwards, with sakes of owner-occupied houses taxed sold within a year of acquisition taxed at 16% of sale price.  Then the holding period was increased from one year to four years. In subsequent rounds, LTV ratios were lowered and minimum cash down payment increased.

Despite these measures, property prices kept surging. In the sixth round, new residential loans were capped at 35 years, with existing loans over 35 years facing tighter LTV ratios.  In the seventh round the government revised the additional buyer’s stamp duty (ABSD), increasing rates from 5% to 7% for Permanent Residents’ (PRs) first residential property purchase, and Singaporeans’ second residential purchase.

This resulted in a 23.5% decline in sales transactions within a year, but prices continued to surge till the end of 2013.

Eighth, ninth and tenth rounds of market-cooling measures followed.

These market-cooling measures have been effective, as evidenced by the 9% decline in property prices since the peak in Q3 2013.

Responding to calls to lift the cooling measures, the government reiterated that while these policies have been effective in stabilizing the previously overheating property market, relaxing them may risk a premature market rebound, according to Minister for National Development Lawrence Wong.

“The government might be persuaded to relax some measures if home price decline picks up pace such that annual declines threaten to enter into double digit territory amid slow sales activity and economy,” said Tay Huey Ying of JLL Singapore.

Singapore house prices Singapore’s housing market is expected to remain depressed in the coming months, amidst weak economic growth and restrictive government policies, according to some local property experts.

Singapore's economy expanded by 1.8% y-o-y in Q1 2016, at par with the previous two quarters, according to the Monetary Authority of Singapore. GDP growth is expected between 1% and 3% this year, from 2% in 2015, 3.3% in 2014, 4.7% in 2013, 3.7% in 2012, and 6.2% in 2011.

Analysis of Singapore Residential Property Market »


RENTAL YIELDS
Last Updated: May 15, 2016



Singapore is a safe haven, it is a liquid market, everyone in Asia knows and trusts its institutions. Low interest rates have played their part in pushing property prices up, despite the efforts of the ever-vigilant Monetary Authority of Singapore and the government. Property in Singapore commands a premium, and conversely returns to owners who rent out their properties are low.

Nobody can say that condos in Singapore are cheap, at around US$13,500 per square metre (sq. m.). That’s because there’s a ‘global city’ premium. Gross rental yields in Singapore remain poor, at around 2.5%. Yields are a little higher on smaller apartments than large ones, as is typical in most property markets. But those yields alone would not be a reason for owning property here.

Prices have been falling gently over the past 2 years, especially in the core and central region.

Round trip transaction costs are very low in Singapore. See our Property transaction costs analysis for Singapore and Property transaction costs in Japan, compared to the rest of Asia.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Jun 20, 2016



Rental Income: Net rental income earned by nonresidents is taxed at 20%. Property tax, insurance, maintenance and repairs are all deductible from gross rental income.

Property Tax: Property tax is levied at a flat rate of 10% for rental properties. Foreigners pay a 10% surcharge.

Capital Gains: There is no capital gains tax.

Inheritance: There is no estate duty as of 15 February 2008.

Residents: Residents are taxed on their income at progressive rates, ranging from 2% to 20% for tax years 2015 and 2016.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Jun 21, 2016



The total roundtrip costs are about 13.45% to 34.45%. The buyer pays stamp duty at around 1% to 3%. The buyer may pay additional stamp duty of 5% to 15. 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 four procedures, typically done in six days.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jun 23, 2006



Singapore condominiumsWith 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).

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Jun 24, 2016


Economy remains weak

Singapore house pricesSingapore's economy expanded by 1.8% y-o-y in Q1 2016, at par with the previous two quarters, according to the Monetary Authority of Singapore. GDP growth is expected between 1% and 3% this year, from 2% in 2015, 3.3% in 2014, 4.7% in 2013, 3.7% in 2012, and 6.2% in 2011.

In the first quarter of 2016, overall unemployment stood at 1.9%, unchanged from the previous quarter but down slightly from an average unemployment rate of 2% in 2010-2014, according to the Ministry of Manpower (MOM). Unemployment among Singaporeans increased from 3% in Q4 2015 to 2.6% in Q1 2016, but dropped among Singapore residents from 2.9% to 2.7%. Long-term unemployment rate rose from 0.5% to 0.7% over the same period.

Inflation was -0.5% in April 2016, from -1% in the previous month. Inflation was -0.5% in 2015, 1% in 2014, 2.4% in 2013, 4.6% in 2012, 5.2% in 2011. It is estimated that inflation will be 0.2% in 2016, according to the IMF.

The country’s central bank, the Monetary Authority of Singapore, has set a tight monetary policy in since April 2010, allowing a “modest and gradual” appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band. However in April 2016, the central bank decided to abandon the previous policy and set the rate of the Singapore dollar's appreciation to zero percent, in an effort to buoy economic growth against a dimmer global economic outlook.

“This is not a policy to depreciate the domestic currency, and only removes the modest and gradual appreciation path of the S$NEER policy band that was in place,” the MAS reports.

The average exchange rate in May 2016 was USD1 = SGD1.3698, slightly down from USD1 = SGD1.3353 in the previous year.







  • Strong & stable economy
  • Low transaction costs
  • Pro-landlord rental market
  • Very low yields
  • Moderate rental income tax
RESIDENTIAL PROPERTY FACTS
Price (sq.m): $13,748 For a 120 sq. m. property, usually an apartment.
Rental Yield: 2.54% For a 120 sq. m. property, usually an apartment.
Rent/month: $3,498 For a 120 sq. m. property.
Income Tax: 15.13% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 23.95% 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: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

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