Jan. 16 (Bloomberg) -- Singapore’s December private home sales dropped to the lowest in two years after the government imposed new taxes on house purchases.
Private home sales in the island city fell to 632 units in December, the lowest since December 2009, according to data from the Urban Redevelopment Authority. Total sales for the year declined 24 percent to 12,656 units from a year, the data showed.
“This result was as predicted when the policy was implemented,” Carolyn Goh, a spokeswoman at PropNex Realty, a real estate broker, said in an e-mailed statement today. “Cautious sentiments prevails in December, with potential private homebuyers preferring to keep their options open before committing to any purchase in waiting for price corrections.”
Singapore has been attempting to rein in prices since 2009, when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Home prices climbed 0.2 percent in the fourth quarter from the previous three months, the smallest gain in 2 1/2 years, according to government data.
The introduction of additional taxes on foreigners buying homes in the island city will probably cause a further drop in demand as they made up 36 percent of transactions in the prime market last year, Jones Lang LaSalle Inc., the world’s second-biggest publicly traded commercial-property broker, said.
Foreigners and corporate entities will have to pay an additional 10 percent stamp duty, the government said on Dec. 7. The extra levy will be 3 percent for permanent residents purchasing a second home and for citizens buying their third residential property. The government earlier imposed a 1 percent duty on the first S$180,000 ($139,232) of the property price, 2 percent on the next S$180,000 and 3 percent for the remainder.
Demand for prime properties such as those close to the Orchard Road shopping belt has been falling, with sales dropping 44 percent in the fourth quarter compared with the previous three months, Jones Lang said on Jan. 12. The prime markets are suffering from an oversupply of new stock, with approximately 60 percent of completed and unsold units island-wide located in those areas as of September, it said.
Sales in the quarter fell to 3,726 units, the lowest in three quarters, government data showed.
To contact the reporter on this story: Pooja Thakur in Singapore at firstname.lastname@example.org
To contact the editor responsible for this story: Andreea Papuc at email@example.com