Governments across Asia Pacific have been trying to strike a balance between ensuring that residential property remains affordable to domestic citizens, while retaining its attractiveness to foreign talent who make an economic contribution to the country, according to Knight Frank’s Asia-Pacific Residential Review July 2013: Special Analysis.
While Japan, South Korea and New Zealand have no restrictions against foreign ownership of property, other countries across Asia-Pacific have a full spectrum of restrictions for both non-resident and resident foreigners. The rapid increase in residential prices in some countries in Asia Pacific has actually pushed policy makers into taking more protectionist stances as domestic affordability becomes an issue.
“Although cross border residential property acquisitions have increased over the last few years and there remains opportunities across Asia Pacific for foreign buyers, the politically sensitive nature of foreign ownership is likely to mitigate the chances of any wholesale changes in the near future,” said Nicholas Holt, Head of Research, Asia Pacific.
Key Highlights
China
• While the “Five New Measures” are being implemented across the country to varying degrees, authorities are considering rolling out the property tax, trialled in Shanghai and Chongqing across more parts of the country.
• Non-resident foreigners are not permitted to buy property in mainland China. However, foreigners who have worked or studied in China for at least a year are allowed to buy a home for self-occupation.
Hong Kong
• Currently foreigners can buyproperty without restriction but must pay a 15% additional buyer’s stamp duty.
• Hong Kong saw a slowdown in both the primary and secondary residential markets. At the end of Q1 2013, prices recorded an annual growth of 28%.
• With the cooling measures continuing to have an impact, Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank, believes there will be a drop in activity in both the primary and secondary markets over the next few months.
Singapore
• With fears of an interest rate rise, the Monetary Authority of Singapore ruled that the total debt servicing ratio for any property buyer should not exceed 60% of his income, putting a further squeeze on the market.
• Foreigners can buy private condominiums freely although they are subject to 15% additional buyer’s stamp duty. For landed property, foreigners have to fulfil certain criteria before permission is granted from the Land Dealings Approval Unit (LDAU), including being a Singapore permanent residence (PR) and making a significant economic contribution to the country. Currently, Sentosa Cove is the only place in Singapore where non-PR foreigners may buy a landed home.
• The proportion of foreign (non-PR) purchasers increased to 9.9% of sales in Q1 2013, up from an average of 6.4% in 2012, while the Chinese purchasers topped the list, constituting 29.5%. • The increase in foreign buyers would suggest the additional stamp duty is becoming an accepted price to pay.