Foreigners snapping up more pricey homes

Published 25 May 2011
The Business Times
By Uma Shankari

Their share of private home-buying has risen, especially at the higher end

The proportion of private homes bought by foreigners jumped to 16 per cent in the first three months of 2011 – the highest quarterly percentage ever recorded since Q1 1995, when the data was first made available for analysis.

Profile of purchasers by residential status (excluding collective sales)

Profile of purchasers by residential status (excluding collective sales)

The previous high of 15 per cent came in Q4 2007, at the height of the last property boom. DTZ, which analysed caveats lodged for both new and secondary sales, said that foreigners accounted for 13 per cent of all private home purchases in Q4 2010.

DTZ’s analysis also shows that more foreigners bought high-end homes in Q1 2011. For homes that cost $1.5 million and above, the proportion of purchases by foreigners rose to 21 per cent in the quarter, up from 17 per cent in Q4 2010.

But on the other hand, more Singaporeans picked up homes for under $500,000. According to DTZ, Singaporeans accounted for 80 per cent of purchases below $500,000 in Q1 2011, up from 72 per cent a quarter earlier.

This reflects the smaller budget among Singaporean buyers, said DTZ’s Southeast Asia research head, Chua Chor Hoon.

Anecdotal evidence from the ground confirmed the trend.

Wendy Tang, Knight Frank’s director of residential services, said that the proportion of foreigners and permanent residents (PRs) who bought units in new launches marketed by Knight Frank rose to 31 per cent in the first quarter of 2011, up from 20-25 per cent in earlier quarters.

DTZ also found that the ratio of mainland Chinese (both foreigners and PRs) among non-Singaporean buyers reached a new high of 24 per cent in Q1 2011 – the first quarter that they are the top foreign purchasers of residential properties in Singapore.

The Chinese overtook the Malaysians, who have held the top position since Q2 2008. The Malaysians’ share among non-Singaporeans dipped from 24 per cent in Q4 2010 to 21 per cent in Q1 2011.

DTZ, which downloaded the caveats on May 10, found 6,368 caveats lodged for private homes sold in the first quarter – some 25 per cent lower than the 8,455 transactions recorded in Q4 2010 as a new round of cooling measures implemented by the government on Jan 14 affected demand.

The most significant fall was for secondary sales in February, with 745 caveats compared to 1,664 in January 2011 and 1,890 in December 2010.

However, the volume rebounded to 1,592 caveats in March, close to the January level, as the knee-jerk reaction to the cooling measures appeared to wear off.

The primary market showed less adverse effects from the cooling measures.

Developers sold 1,210 new units in January, just slightly below the 1,332 units sold in December 2010. And following the cooling measures, February’s new sales volume defied expectations with about 1,100 units sold.

The new sales number then recovered by March to record close to 1,400 units as the sustained level of launches and liquidity in the market continued to drive demand.

But analysts also warned policy changes could dampen demand in the coming months.

‘The recent General Election has magnified the strong concerns among locals regarding high housing prices and the influx of foreigners,’ said DTZ’s Ms Chua. ‘It could prove to be the catalyst for more forthcoming policies to address the concerns, which would dampen demand in the residential market.’

Cushman & Wakefield managing director Donald Han said that household income ceiling for buying new HDB flats could be raised, which will also impact the demand for private homes, especially in the mass-market segment.

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