Foreign Condo Purchases in Singapore Plunge 71% Since April 2023 ABSD Hike

The hike in Additional Buyer's Stamp Duty (ABSD) has proven effective in dampening foreign investor demand, with private condominium sales to foreigners plunging by 71% in the year following its implementation—demonstrating the efficacy of the property cooling measures.

Following the increase in the ABSD rate from 30% to 60% on 27 April 2023, foreigners purchased just 306 condo units between May 2023 and April 2024 (as of 27 April).

By comparison, foreigners bought 1,064 condo units between May 2022 and April 2023, accounting for 5.4% of total condominium sales during that period. From May 2023 to April 2024, this share dropped to 1.8%.

Analysts noted that the pullback in foreign buyers was more pronounced in prime locations or the Core Central Region (CCR), which traditionally draws stronger interest from overseas investors.

In the 12 months preceding the ABSD increase, foreign buyers accounted for approximately 14% of CCR condo sales. Over the past 12 months, this figure has declined to around 6%.

Urban Redevelopment Authority (URA) data revealed that fewer units changed hands following the ABSD hike. Transaction volume in the CCR fell 36.6%, from 4,215 units to 2,672 units.

The number of luxury CCR apartments transacted at $10 million and above dropped from 73 units in 2022 to 50 units in 2023, even as the average unit price for such properties held relatively steady at $3,800 psf.

Many investors possess strong holding power and are under no pressure to offload their assets at discounted prices, preferring instead to rent out their units... It is therefore unsurprising that prices remain resilient despite subdued transaction volumes.

Furthermore, financial institutions have ramped up due diligence for big-ticket purchases, resulting in a more protracted sales process and a slowdown in luxury home sales.

In recent weeks, however, an increasing number of foreign buyers exempt from the 60% ABSD have made inquiries or committed to purchasing local luxury non-landed private residential homes.

A significant number are of South Asian descent holding US citizenship. Nationals of the United States, Iceland, Liechtenstein, Norway, and Switzerland are exempt from paying ABSD on their first residential property purchase in Singapore.

Following the ABSD revision, the number of mainland Chinese buyers in the luxury property segment experienced a steep decline.

In 2020 and 2021, Chinese nationals topped the foreign buyer charts for new and resale condos in the CCR, registering 112 and 155 transactions respectively. This declined to 113 units in 2022 and slipped further to 93 units in 2023.

From January to March 2024, foreign buyers accounted for just 1.2% of total new and resale condo transactions. This is down from 1.7% in Q4 2023 and marks the lowest quarterly level recorded since 1995. Amid subdued foreign demand, home sales will continue to be anchored primarily by local buyers.