BUYERS from China have lost pole position among foreign purchasers of Singapore property in the wake of December's tough cooling measures.
Mainland buyers, and other foreigners, have fled the local market in droves, stung by a hefty 10 per cent additional stamp duty.
A report by DTZ Research found that Chinese, including permanent residents, bought just 292 homes in the first quarter. This is 54 per cent down from the 640 homes bought in the fourth quarter last year and the lowest volume in more than two years.
FALL IN FOREIGN PURCHASES BIGGER THAN IN 1996
This could be due to the implementation of other broad-based measures in 1996 which also affected other buyer groups, while the additional buyer's stamp duty had a larger impact on foreign demand.
- A report by DTZ Research
The proportion of Chinese buyers among non-Singaporean buyers fell correspondingly to 23 per cent from 29 per cent in the three months before, the sharpest drop among all nationalities.
Malaysians reclaimed the top spot with 362 home purchases - a 28 per cent share among foreign buyers - possibly due to the larger number of Malaysian permanent residents here.
Tough cooling measures unveiled last Dec8 slapped a 10 per cent additional buyer's stamp duty on all home purchases by foreigners. But permanent residents had to fork out only an extra 3 per cent on their second and subsequent home purchases.
As a result, demand from non-permanent resident foreigners has nosedived 75 per cent to just 336 units. Their proportion of the private market fell to a three- year low of just 6 per cent.
Permanent residents took a 16 per cent share, while Singaporeans made up the remaining 78per cent.
DTZ said the fall in the proportion of foreign purchases post-additional buyer's stamp duty has proved more drastic than a major policy change 17 years ago.
Back in the third quarter of 1996, purchases by foreigners fell by a smaller percentage - 57per cent - after the Government restricted the extension of loans to permanent residents and foreigners in May 1996.
'This could be due to the implementation of other broad-based measures in 1996 which also affected other buyer groups, while the additional buyer's stamp duty had a larger impact on foreign demand,' the report said.
'In addition, foreigners had access to overseas capital and were not much affected by the stricter financing regulations in 1996.'
The DTZ report also touched on the trend of HDB owners buying shoebox homes of less than 500 sq ft. These tiny units make up 16 per cent of homes bought by those with HDB addresses.
This strong demand for shoebox units, which tend to command higher unit prices, also led to units costing between $1,000 and $1,500 per sq ft (psf) making up the majority of all homes sold in the first quarter. Previously, most homes sold were typically under $1,000 psf.
In another first, the proportion of shoebox units sold in suburban areas formed the bulk of the total shoebox market, eclipsing that of the city fringe region.
About 65 per cent, or 461 shoebox units, sold in the first quarter were located in suburban towns, a marked increase from 29 per cent in the previous quarter. Almost half of the shoebox units sold in these suburban areas came from Parc Rosewood. In the city fringe area, the top selling project for these units was Guillemard Edge.
'Going forward, the price range of $1,000 to $1,500 psf is expected to remain as the dominant unit-price segment,' DTZ added.
'New large-scale projects in the second quarter such as Katong Regency, Sky Habitat, Seahill and Eight Riversuites have been launched with average unit pricing of more than $1,200 psf and have seen healthy take-up rates.'
However, experts have warned about policy risks in the segment even as National Development Minister Khaw Boon Wan sounded warnings about it being 'an untested market' in the heartland.
Ms Chua Chor Hoon, DTZ's head of Asia-Pacific research, said that possible government intervention could take the form of development control.
This could be similar to what the Government implemented in November last year when it restricted the number of dwelling units for non-landed developments built on smaller plots of land in areas such as Telok Kurau.