It was 5 years ago that I decided to leave my home town of Perth and become an Aussie expat in the lion city of Singapore. As a home to many multinational firms, it’s a culturally diverse place and a popular settlement destination for many expats. One of the many facets that you quickly learn upon arriving in Singapore is that this utopian lifestyle is not free, and it truly lives up to its reputation of being one of the most expensive places to live, and this is particularly true for Singapore property prices.
Despite the fact that rental prices have dropped considerably over the past 5 years, many Australian expats are exploring the option of purchasing a property in Singapore, generally with the key goal of removing rent as a line item on their budget (for now, we’ll ignore the fact that this will be replaced with ‘bank interest’). For many, buying your own home in Singapore may be the sensible option for you, so I’ve written this article as a guide for Australian Expats considering buying property in Singapore.
What are the different types of properties available?
Let’s start with the basics and review what types of properties are available, and which you’re able to purchase as a ‘foreigner’ or Aussie expat living in Singapore. Here is a brief snapshot of the many types of properties available in Singapore:
HDB Housing – Public Housing
Subsidised by the Housing Development Board in Singapore, HDB housing is designed to ensure that Singaporean citizens can retain access to relatively reasonable housing. It is heavily supported and over 80% of Singapore’s citizens live in HDB flats. There are certain eligibility criteria for such a property, the most notable of which is that your household income can not exceed a certain level.
This type of property is tailored toward younger Singaporean professionals as they will carry a similar price tag to the HDB flat while having a similar design and features as a private condominium. Unless married to a Singaporean citizen, these first two property types are not available to Aussie expats.
For most expats living in Singapore, they will be living in a condominium building, which will typically have the usual features of swimming pools, gymnasiums, basketball courts and BBQ areas. Some of the larger developments will have their own small shopping centres and tennis courts also. This will typically be the sought after dwelling type for those who do not want the price tag and maintenance of a landed property.
With the private apartment dwelling type, you also then have the Walk-up, which as the name suggests implies that there is no lift, and is typically more common for smaller developments of no more than 6 storeys.
A landed property in Singapore is what most Australian expats would be used to living in back at home, and simply means that there is also a usable land component to the property, i.e. a backyard. This will include Terrace Houses, Conservation Houses, Shophouses, Town Houses, Cluster Houses, Bungalows, Semi-Detached Houses and of course, the understated ‘Good Class’ Bungalow, which will have a minimum land size of 1,400 sqm and come with an appropriate price tag. There are approximately 1,000 ‘Good Class’ Bungalows spread across Singapore.
Under the Residential Property Act, there are restrictions on properties that can be purchased as an expat without prior approval, so it’s important that you do your own research and obtain the necessary approvals where required.
What is the approximate price of a property in Singapore?
This is a broad question, however to give you some idea, a 2 bedroom Condominium in a reasonable area of Singapore will set you back from S$1.8M – S$2.5M, while a Detached Bungalow will range from S$5.0M to S$10.5M typically, however many of the ‘Good Class’ Bungalows, will typically start at S$20M and climb from there. Being a small city state with an excellent public transport system, there is scope to purchase your home further out and rely on their state-of-the-art MRT and bus networks.
What are the costs and taxes associated with buying a property in Singapore?
This is a key question, and where many Aussie expats buying property can find themselves in an unpleasant situation if they’ve not done their homework beforehand. If you are applying to the Singapore Land Authority for approval to purchase your property, then this will attract an application fee of approximately S$1,220. There is then the Buyer’s Stamp Duty (BSD) and the Additional Buyer’s Stamp Duty (ABSD), which are charged at the following rates:
Buyer’s Stamp Duty (BSD)
- S$0 – S$180,000: 1.0%
- S$180,001 – S$360,000: 2.0%
- S$360,001 – S$1,000,000: 3.0%
- S$1,000,001 +: 4.0%
Additional Buyer’s Stamp Duty (ABSD)
Other fees will include the Land Valuation fee, Legal costs, Mortgage stamp duty which is generally fixed at S$500, the Option to Purchase Fee which is 1.0% of the property price if you simply wish to secure it while doing further research. The Offer to Purchase fee is then effectively part of your down payment. Let’s consider a case study to outline how these fees can add up relatively quickly. We’ll consider a case study of John and Mary looking to purchase a private 2 bedroom condominium for S$2.0M, and we’ll assume for the purposes of this illustration that they’ve managed to secure a loan with an 80% loan to value ratio.
|Fee Type||Amount (S$)|
|Property Purchase Price||S$2,000,000|
|Buyer’s Stamp Duty (BSD)||S$64,600|
|Additional Buyer’s Stamp Duty (ABSD)||S$300,000|
|Stamp Duty on Mortgage||S$500|
|Total Upfront Costs||S$769,400|
As you can see from the table above, the total upfront cost for John and Mary to purchase their 2-bedroom condo is S$769,400, while S$369,400 of these costs not actually going towards reducing the mortgage on their property.
How can I secure a mortgage in Singapore?
As I would always suggest back home in Australia, speak to a professional mortgage broker in Singapore that has experience in helping Australian expats secure a mortgage and purchase property in Singapore. Ensure that they have access to a wide range of lenders and consider your options with regard to various loan features.
When can I sell the property?
In most instances, the property must be held for 5 years, and for many properties, it must also be lived in for this 5 year period rather than renting it out. If it’s sold prior to the 5 year mark, you may also find yourself subject to the Seller’s Stamp Duty, which can range from 4 – 16%. This can be quite a significant amount, again highlighting the importance of ensuring your do your homework and consider your scenarios, such as what would happen if you had to return to Australia, or elsewhere.
Should I use a property agent in Singapore?
As an Australian expat, it can be difficult not just to identify the right property, but navigate the whole process from finding it to securing it and taking ownership. While a fee would apply, which is typically 1.0% of the property price for the buyer, the right property agent who you trust could save you a great deal of time and money in the long run. Consider asking your other advisers such as your financial planner or accountant for recommendations, and/or speak to your friends / colleagues who’ve purchase property in the past and ask about their experiences. The key property websites in Singapore are as follows:
- iProperty – https://www.iproperty.com.sg/
- PropertyGuru – https://www.propertyguru.com.sg/
- ST Property – http://www.stproperty.sg/
If you’re working with a financial planner in Singapore, work through the scenarios of a property purchase in Singapore with them and consider all of your options. It’s also important to ensure that you consider how this property would be treated if you had to move back to Australia sooner than expected, and what your options would be.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Adviser with Australian Expatriate Group, specialist division of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian expats in Singapore.
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Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.