Property investment

Singapore property investment versus Overseas property investment

Singapore property investment versus Overseas property investment (residential) after the implementation of ABSD and TDSR

Since the ABSD (Additional buying stamp duty) and TDSR (Total debt servicing ratio) implemented by the government to prevent Singapore property prices (residential) skyrocketing and reach bubble state, Singapore property transaction has cooled down and residential property price also has softened. Due to this reason, there is growing trend for Singaporean to look for alternative property investment in overseas such as Malaysia, Australia, Japan, UK, USA, Thailand, Philippines, and Cambodia.

In this article, we will see the reason and effect of the policy and the changes into the Singapore investor behaviour and compare the payment between investing property in Singapore versus overseas .

5 Top reasons why the government is implementing the cooling measures for Singapore property market

  1. Low interest rate - Due to the global financial crisis that hit U.S. in 2008, Singapore interest rate has been kept low, average mortgage interest rate is only about 1.5%, This low interest rate has spurred smart investors and speculators into frenzy borrowing to speculate the property market and make high and quick return.
  2. Prevent bubble - Due to low interest rate and high speculative activities in the market which will lead to real estate bubble.
  3. Filter buyer's profile, intention, and ability in repayment - ABSD is act as the filter for buyer's profile and intention. Because extra stamp duty paid is between 5-15% depending on your profile and it is paid maximum within 7 weeks on the booking day. Those who are willing to pay means have a good profile and intention. TDSR is used for calculating buyer's ability in paying back the loan. It is also thoroughly plan with only maximum 60% of income and 3.5% interest rate, in case the interest rate is started to pick up.
  4. Protect genuine investor - Property is a long term investment tools and the policy is to protect genuine investor and discourage speculators.
  5. Protect the market and healthy property investment environment -  If the global economic situation turn worse again, the property market may not drop as hard as the other countries which have not implemented any bubble prevention. And government has more tools to play with to draw back the liquidity into Singapore.

Effect on the ABSD and TDSR

  1. Lower residential property transaction
  2. Soften residential property price
  3. Higher interest to invest into overseas property market
  4. Higher interest to invest into Singapore commercial property market

Now the question, is Singapore residential property still good investment?

In my opinion, Singapore residential property market is still a good investment.

7 top reasons why Singapore residential property market is still a good investment

  1. Increasing target population to 6.9 Million by 2030
  2. Great infrastructure expansion plan rolled out by the government
  3. Extension of CBD area to absorb more work force
  4. Low unemployment rate
  5. Stable economic and political stability
  6. Stable currency, tend to increase compare to other currencies in the long run
  7. Safe haven for South East Asia and Asian countries

Growing trend of Singaporean to invest in overseas property

Singapore emerged as the largest Asian investor of overseas property, spending US$11.9 billion in such assets last year from US$9.4 billion during 2013, revealed CBRE.

The city-state maintained its position as the top source of outbound capital in the region, followed by China with US$10.1 billion and Hong Kong (US$6.3 billion). Malaysia and Taiwan trail behind with US$1.7 billion and US$0.2 billion respectively.

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9 Reasons why overseas property investment is a growing trend in Singapore

  1. Lower Quantum
  2. Lower Down Payment - ABSD paid to buy Singapore property can cover the full property price or paid the down payment depending on the country and location they invest.
  3. Deferred Payment Scheme
  4. Lower Stamp duty
  5. Possible of higher potential return and rental yield
  6. Attractive rental guaranteed scheme offered
  7. Future children accommodation - further study into overseas for their children
  8. Relocating or retire home
  9. Strong Singapore dollar

Comparing invest in Singapore residential property versus overseas residential propertySingapore versus overseas property investment

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