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.
Sales have risen as developers offer smaller units, according to CBRE Group Inc. The median size of apartments declined 24 percent to 667 square feet in the quarter ended March from the previous three months while the median price slid 18 percent to S$786,340, it said.
Foreigners and corporate entities have to pay an additional 10 percent stamp duty following measures introduced in December. The extra levy is 3 percent for permanent residents purchasing a second home and for citizens buying their third residential property.
The next round of cooling measures will be targeted at curbing investment demand from Singaporeans, CLSA, a unit of Credit Agricole SA, said in a report dated April 17. The evidence of strong investor demand can be seen in the overwhelming response to “shoebox developments,” according to the CLSA report.
“We believe the government could potentially introduce further cooling measures should the positive trend persist,” analysts Melinda Baxter and Xin Yan Low at Merrill Lynch said in a note to clients dated April 16.
The measure Singapore is taking are fairly strong. It is sensible to try and prevent extremely high prices. Singapore is already on of the most expensive places to live. It seems to me these measure are wise. And taxing foreigners is always a nice thing to do if you can get away with it (and Singapore can).
Another way to cope with the real estate demands in Singapore is to make it more possible to move into Johor Bahru, Malaysia. Singapore and Malaysia have been working on strengthening ties and economic cooperation. There is even talk of extending the Singapore MRT into Johor Bahru before the end of the decade. Those talks are still pretty speculative (though senior members of both governments have expressed support for the goal).