Chinese homebuyers to gradually return to Singapore market as travel restrictions ease: Huttons

MAINLAND Chinese buyers are expected to return to Singapore’s housing market, albeit gradually, as border restrictions ease in China, according to real estate consultancy Huttons Asia. 

In a Wednesday (Jan 11) report, Huttons noted that the reopening of borders and removal of quarantine restrictions in China mean that countries in the Asia-Pacific region – such as Singapore, New Zealand and Malaysia – are likely to see a return of both Chinese tourists and homebuyers. 

The consultancy attributes this to Singapore’s reputation as a safe haven in times of uncertainties, which is favourable for investors. 

“There is keen interest among Chinese corporates to set up operations in Singapore,” it said. “This will have spillover effects on other segments of the property market.” 

The International Monetary Fund also predicted that the housing markets in several markets, such as Hong Kong and Malaysia, will decline in 2023. “Singapore is probably the only city in the Asia-Pacific region where property prices are forecast to grow in 2023 on the back of low unsold supply,” said Huttons.

As at Q3 2022, there were 15,777 unsold units on the market – about 12,000 units below the 10-year average of 27,767 units. 

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Huttons therefore predicts that foreigners will switch their focus to the city-state. 

Still, the consultancy believes that demand from Chinese nationals will not surge, but instead, increase gradually. 

Demand from Chinese nationals is still at a low since its peak in 2011, which saw 1,637 transactions in non-landed home sales. In contrast, just 227 home sales were made by Chinese buyers in 2022. 

Data from the government also showed that the percentage of foreign homebuyers in the private residential market has more than halved since 2014 – from 8.4 per cent then to 3.5 per cent in 2022. 

This is mainly due to the many rounds of market cooling measures implemented by the government since 2011 to moderate demand among foreign homebuyers, said Huttons. 

Following the introduction of the 10 per cent additional buyer’s stamp duty (ABSD) in 2011, non-landed home sales by Chinese buyers plummeted 62.2 per cent year on year to 618 units in 2012. 

When the ABSD was raised to 15 per cent in 2013, home sales from Chinese buyers fell by 38.6 per cent year on year to 390 units in 2014, and when ABSD was further inflated to 20 per cent in 2018, the number of units bought by Chinese nationals dropped 33.8 per cent year on year to 339 units in 2019. 

In 2021, the ABSD was jacked up to 30 per cent. “Based on past trends, it may take up to two years after a cooling measure before purchases by Chinese foreigners return to (normal),” said Huttons.

While there are some outliers to the trend – for instance, a Chinese national had reportedly purchased 20 units in CanningHill Piers in 2022 with a total quantum of S$87.6 million – the consultancy expects buying sentiments to remain “cautious”. 

“Economic uncertainties and the prohibitive 30 per cent ABSD will likely cap demand (of Chinese buyers),” it said.