According to the final value recently released by Singapore's Urban Redevelopment Authority (URA), prices of private homes in thesecond quarter fell by 0.2 per cent on a year-on-year basis, which is slightly lower than expected, but this is the first time since the first quarter of 2020 that private homes in Singapore have fallen.

The Singapore property market began to soar after the epidemic. According to the Urban Redevelopment Authority of Singapore, the price of private homes in Singapore rose by 8.4 per cent in 2022, compared to 10.6 per cent in 2021. In response, the Singapore government has repeatedly raised taxes on home purchases, especially for foreigners, to regulate property prices.

Zhou Shixin, associate researcher at the Asia-Pacific Research Centre of the Shanghai Institutes for International Studies (SIIS), told the First Financial News that the Singaporean government's restriction on foreigners' local home purchases through economic leverage has greatly contributed to the stabilisation of Singapore's society and economy, and that the current high tax rate for foreigners' home purchases is expected to ease after the real estate market has stabilised, but the restriction will still be in place for a long period of time.

In tandem with the modest decline in house prices, rental increases for private homes have also started to slow down. They rose by 2.8 per cent in the second quarter on a year-on-year basis, and while they are still rising, this is the smallest increase since 2021. Meanwhile, about 20,000 private housing units are expected to be completed this year, the largest annual supply since 2017, which is expected to further defuse the upward rental momentum.

As Asia's key financial centre, Singapore is a prime destination for home ownership for the rich and famous from all walks of life. Overseas buyers have flocked to the Singapore property market amid the epidemic. For non-Singaporean permanent residents, in principle, they can only buy private homes.

The housing supply structure in Singapore is dominated by HDB flats and supplemented by private homes. About 80 per cent of Singaporeans live in government-provided HDB flats, which are priced by the government and are at least 50 to 70 per cent less expensive than comparable private homes because the government does not pay for the land and subsidises the construction costs. Only about 20 per cent of high-income families and foreigners live in private homes built by developers.

HDB flats come into the market by allowing the holders to resell them after fulfilling certain conditions. The prices of HDB flats today are also affected by the high prices of private homes. Singapore OCBC Bank economist Xie Dongming previously told the first financial reporter, Singapore is a smaller market, from the basic residential to high-end residential, it is easy to influence each other, thus creating price linkage.

For this reason, the Singapore government in December 2021 and September 2022 has twice introduced the property market cooling policy. On 27 April this year, the Singapore government made another move to increase the Additional Buyer's Stamp Duty (ABSD) payable by foreigners on property purchases from 30% to 60%, which is the highest tax rate for foreign buyers in the world.

The taxes and levies payable on property purchases in Singapore are collectively known as Stamp Duty (SD) and are divided into two categories, namely Buyer's Stamp Duty (BSD) and Additional Buyer's Stamp Duty (ABSD). The Buyer's Stamp Duty (BSD) is payable at the time of purchase, while the Additional Buyer's Stamp Duty (ABS) depends on the status of the purchaser and the number of properties held.

According to the latest report from global property technology group Juwai IQI, Singapore ranked 10th on the list of destinations for Chinese buyers to purchase properties overseas in the first half of the year, based on the number of buyer enquiries on the platform.

While property prices have now stabilised, the use of price leverage to regulate them has been accompanied by amendments to property laws and regulations. Singapore's Ministry of Justice and the Singapore Land Authority announced on the evening of 19 July that from 20 July onwards, foreigners will be required to obtain government approval for the purchase of lots that are currently zoned for "commercial and residential" use.

The Singapore government said that this is after the revision of the Residential Properties Act, the implementation of the measures, the purpose is to protect the residential land of Singaporeans, for the current holdings of such properties overseas owners will not be affected, but if they intend to re-development of the property, they need to get the government's approval.

Monetary Authority of Singapore (Ravi Menon) said in July, there are signs that Singapore's property market has begun to stabilise, the Monetary Authority will be determined to ensure that property prices are in line with economic fundamentals, rather than being driven by speculation and the inflow of hot money.

Singapore's Minister for Finance Wong Chor Chye also said in December 2021 in an interview with China's media, including China Business News, "We do not want Singaporean and external investors to invest heavily in real estate, resulting in property prices moving away from economic fundamentals. As a result, many Singaporeans may feel that houses are not affordable."

Analysts said that Singapore's real estate market before the crazy performance, on the one hand, increased the pressure on the lives of Singapore's locals, while on the other hand, high prices lead to the rising cost of living caused by the decline in the willingness of foreign investors to invest in the loss of talented people, which in turn makes Singapore as an international financial centre of attraction declined.