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Market Watcher Series Issue 9

Will Foreigners Continue To Buy Properties In Singapore After The ABSD Hikes?
New property cooling measures were imposed on 27 April 2023 as property prices showed renewed signs of acceleration amid resilient demand. The Additional Buyer’s Stamp Duty (ABSD) rates were raised, and cooling measures have turned into ‘freezing measures’ for foreign buyers who now pay 60 per cent ABSD. Why is there a need to hike ABSD for foreigners? Will the new ABSD rates deter foreign buyers in the long term? Which market segments could be most or least affected?


The proportion of foreign purchases has risen over the past year and reached a five-year high. Based on URA Realis data downloaded on 15 May 2023, the number of non-landed homes excluding executive condominiums bought by foreigners or non-permanent residents (NPR), rose from 3.1 per cent in Q1 2022 to 6.9 per cent in Q1 2023 (Chart 1). This is the highest proportion of foreign purchases since Q1 2018 (7.3 per cent). In absolute terms, foreigners purchased 259 condos in Q1 2023, up 14.6 per cent from 226 units in Q4 2022, and above the five-year quarterly average of 249 units from Q1 2018 to Q4 2022.

The number of luxury condos bought by foreigners rose to almost a decade high. Even after ABSD was raised to 30 per cent for non-PRs in December 2021, the number of non-landed luxury homes in the Core Central Region (CCR) bought by foreigners spiked 123.9 per cent from 71 units in Q1 2022 to 159 units in Q1 2023. This is the highest quarterly sales since Q4 2013 when 161 units were transacted (Chart 2). In terms of proportion, 15.5 per cent of luxury condos in CCR were bought by foreigners in the first quarter of this year, up from 8.9 per cent in Q1 2022. 


Some luxury purchases may be affected. Condos at higher price tags could be most affected, especially those priced above S$5 million. Foreigners constituted the highest proportion of buyers at 43.9 per cent for condos transacted for at least S$10 million from Q1 2022 to Q1 2023 (Table 1). This is followed by condos transacted at S$5 million to less than S$10 million, as 33.2 per cent of such condos were bought by foreigners. 

Purchases below S$5 million may be the least affected. The majority of condos below S$5 million were bought by Singaporeans (Table 1) and most of them pay lesser or no ABSD (Chart 3). Most of these homes are in the suburbs, and smaller condos in the city fringes. Therefore, Singaporeans, especially first-timers, who do not need to pay ABSD may continue to purchase homes in the coming months, especially if they are in urgent need of housing or for owner-occupation.

Mainland Chinese buyers could be most affected as they constituted the highest number of foreign buyers and PRs (Chart 4). Buyers (PR and non-PR) from China purchased 316 non-landed homes, followed by buyers from Malaysia (159 units), India (115 units), the USA (73 units) and Indonesia (45 units) in Q1 2023. 

In the luxury segment or CCR, Mainland Chinese buyers bought 111 luxury condos last quarter, constituting about 10.8 per cent of total 1,025 luxury condo sales. This is up from 43 units or 5.4 per cent (of 795 units) in Q1 2022.


The proportion of PRs buying condos rose from 18 per cent in Q1 2022 to 20.1 per cent in Q1 2023 (Chart 5). In absolute terms, PRs purchased 758 condos in Q1 2023, lower than the 845 units in Q1 2022. Previously, PRs who bought their first property paid 5 per cent ABSD vis-à-vis 30 per cent for non- s After April’s cooling measures, the ABSD remain at 5 per cent for PRs, whereas non-PRs pay 60 per cent. The big ABSD disparity may prompt more foreigners to buy properties as PRs or new citizens if they are eligible and intend to stay for the long term. If this happens, the proportion of PR purchases may rise further. 

More buyers from China and Indonesia may purchase condos as PRs or new citizens. As a higher proportion of buyers from China (32%) and Indonesia (29%) purchased condos as non-PRs in Q1 2023, they could be more affected by the increased ABSD (Chart 6). More of such buyers may purchase properties as PRs or new citizens in future. There is less impact on Indian (4% as NPR, 96% as PR) and Malaysian buyers (2% as NPR, 98% as PR) as most purchase condos as PRs. Although most US buyers are non-PRs (84%), there will be little impact as they are accorded the same stamp duty treatment as Singaporeans under the free trade agreements. 

Looking Ahead 

The cooling measures may not affect buyers’ perception of Singapore as one of the best places for property investment Our solid economic fundamentals remain, and our properties will continue to be well-regarded as safe-haven assets. Some high-net-worth individuals may continue to park their wealth here as luxury properties are pricey in many other cities. Others may switch to buying non-residential properties. Foreigners who take up citizenship or are eligible to be PRs may likely buy properties through these residential statuses as they pay lesser ABSD. Most buyers, like Singaporeans and first timers, who are less affected, may continue to buy private properties, especially if they have urgent housing needs or intend to own only one private property.













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