Condominium building in Singapore. (Photo: ProjectManhattan / Wikimedia Commons)
The cost of buying, holding and selling a mass market private home in Singapore is significantly lower compared to that in London and Sydney, but tax costs are much higher, revealed Knight Frank’s first-ever Global Tax Report.
The report studied the property and taxation costs in 15 key cities worldwide for foreigners purchasing a unit in their own name as an investment, and renting it out over a five-year period from 2015 to 2020.
Property costs in Singapore amounted to 4.3 percent for a US$1 million property, compared to 7.8 percent and 9.8 percent for London and Sydney respectively. However, tax costs in the city-state were higher at 19 percent, while London and Sydney were 11.3 percent and 18 percent respectively.
Despite this, tax costs for luxury properties here are more favourable, the findings showed.
For a US$10 million home, property costs were at 2.8 percent, compared to 5.4 percent in London and 5.9 percent in Sydney. In addition, tax costs in Singapore were at 20.5 percent, lower than London (20.8 percent) and Sydney (26 percent).
Figure 1: Comparing Singapore with London and Sydney for foreign buyers
Source: Knight Frank Research
“Taxes can sometimes make or break a deal. But at the highest end of the market, the study shows that even accounting for tax, value has emerged for Singapore residential in comparison with other key cities,” said Kah-Poh Tay, Executive Director of Residential Services, Knight Frank Singapore.
The largest tax costs in Singapore are the stamp duties, namely the Buyer’s Stamp Duty (BSD) and the Additional Buyer’s Stamp Duty (ABSD), payable upon purchase of the property.
In the past year, there have been a growing number of calls from developers for the government to tweak the property taxes, as many are unable to sell all their units. However, the government has repeatedly rejected such appeals to adjust the measures.
Alice Tan, Research Head at Knight Frank Singapore, believes there will be no changes introduced in the next three to six months, given that the government’s key objective is to ensure that housing remains affordable.
However, she thinks that Singaporean buyers will find high-end homes more appealing now, due to declining prices.
“Compared to UK and Australia, Singapore offers lower prices on an average psf basis for ultra-luxury non-landed homes. Currency shifts have also made property prices in Singapore more attractive.”
Prices of prime non-landed residential properties in Singapore fell 7.9 percent in Q3 2015 from the previous year, according to Knight Frank’s latest Prime Global Cities Index. Prices in London and Sydney rose 1.3 percent and 13.7 percent respectively during the same period.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
