54% Drop in China Property Buyers: What’s Putting Them Off?

Are you seeing less red, Singapore? Property buyers from China have cooled off, and Malaysians again take top stop as foreign buyers. The most obvious reason would be the new stamp duty; but does it go deeper than that? In this article, I speculate on why Chinese buyers are backing out of Singapore. And take off that “Woo Hoo” party hat for ten seconds would you?


Boat heading to singapore

When you meet the S'poreans, don't smile or wave. Otherwise they'll know you're not one of them.


1. How Have The Numbers Dropped?

According to the Straits Times, Chinese buyers bought 292 homes in the first quarter of this year. That’s 54% down from fourth quarter of the previous year (640 sales). It’s also the lowest volume of sales to Chinese buyers in over two years.

Amongst foreign buyers in general, the percentage of Chinese fell from 29% to 23%. That’s a pretty fast drop in such a short time. But why?


1. Additional Buyers Stamp Duty

The most obvious cause is the ABSD, which adds a 10% stamp duty for foreign buyers.

The added stamp duty is not a deterrent to wealthy home buyers; they’d pay the 10% duty like I’d indulge in an 80 cent candy bar. But it does deter investors, who are more interested in fast returns than a nice house. And speculatively, I’d say more Chinese buyers are investors rather than home buyers.


Guy smoking in a car

How to invest? After selling my mansion in China all I could afford in Singapore was this car.


Investors purchase property in order to generate rental income, or re-sell at a profit. The 10% is off-putting to them, because it delays their return on investment. In this situation, the ABSD worked perfectly: it filters out the hit-and-run investors who are out to milk us, but retains stayers who’ll invest in Singapore.

Overall, losing hit-and run investors is like popping zits. Unappealing…but not as unappealing as having them around. The sooner we get rid of them, the faster we’ll cool our overheating property market.


2. Economic Slowdown in China

China’s embroiled in a political tussle right now. The new politicians are tired of the “old boys” living off the poor, because damnit, they want to live off the poor too.

In the meantime, China’s economy is swerving like a truck with two drunk drivers grabbing at the wheel; and we know how well they drive. If China’s fifth generation leaders reject Dengist policies (which are liberal with bank reserves and promote liquidity), we’ll see a less economically aggressive China.

Thanks to this uncertainty back home, China’s economic growth has slowed for the first time in many years. And although the money’s still floating around, Chinese investors have become more risk-averse.


Panda eating a bamboo shoot

Our economy remains swift and strong, like the…we need a new mascot.


3. Shock Effect

Back in 2011, a reason cited for the Chinese exodus was China’s stringent cooling measures. The Chinese government, in an attempt to control price bubbles, started hacking at the property market like Jason Voorhees on crack. Their government intervention was swift and extreme.

Kind of like Singapore’s ABSD.

Singapore’s always had strong protection for foreign investors, and this history amplified the shock. Even though the ABSD is affordable to Chinese investors, some sense a re-enactment of China’s cooling measures. They’re put off not because of the price, but because of the possibilities it implies.


Icy ground in Beijing

That WAS my condo. We take cooling measures seriously in China.


I spoke to a property agent, who wanted to be known only as Darrell:

“I lost one prospective buyer from China. He was afraid maybe Singapore was becoming like China. He already lost money that way and wasn’t willing to go through it again. Another viewer I spoke to said he wouldn’t even consider buying Singapore property now, because the ABSD was like their cooling measures in China.”

(Gee, funny that he was viewing then.)


4. Anti-Chinese Sentiment

With regard to Chinese immigrants, most Singaporeans are about as inviting as an electric chair. Chinese immigrants are perceived as being loud, crass, and self-serving.

This is aggravated by the fact that, since 2011, wealthy Chinese investors have been pricing locals out of their own property market. With Singaporeans running around screaming bloody invasion, the government has been pressured to take steps. All this relates to point 3: Chinese investors have every reason to fear further cooling measures. We’re baying for blood.


Chinese new year singapore

Can't you tell? We S'poreans have NOTHING in common with China.


It doesn’t help that anger is specifically directed at the Chinese, as opposed to Malaysian or Indian property buyers. This is because of incidents like the Ferrari crash, and the perceived unwillingness of Chinese immigrants to adapt. Many Singaporeans, for example, are frustrated with Chinese immigrants’ refusal to learn English.

If you say “but this has nothing to do with property,” then sorry, but you’re clueless. Property may be about location and money, but it’s also about people. No one wants to live in a place where their neighbours fantasize about setting them on fire.


5. High Cost of Living?

I put a question mark on this one, because it’s an opinion I received but don’t believe. Again according to Darell:

“If you compare Singapore and the more developed parts of China, like Shanghai or Hong Kong, the infrastructure is just as good. The difference is that Singapore has a much higher cost of living. Why will you pay more to stay in Singapore, when opportunities and infrastructure are just as good in Shanghai or Hong Kong?”

Mr. Charlie Sng, a private property investor, also says that:

“In Singapore things are much more expensive than in China. COE, food, education all cost so much, and MAS still strengthen the Singapore dollar. Like that who wants to come and stay here?”


Provision shop in Singapore

70 cents for Yakult? Outrageous! Fetch my limo, we're leaving.


But I don’t believe it.

I hold that high cost of living is irrelevant to Chinese property buyers. The appreciation of their property more than makes up for inflation; and if you can afford a Sentosa Cove bungalow or a penthouse suite, I doubt you’d whine if your coffee costs 40 cents more.

Image Credits:
yatzz, ernop, kevin dooley, IvanWalsh.com, photo_gratis

Why do you think Chinese property buyers aren’t biting? Comment and let us know!Digg Digg

Get more Personal Finance tips and tricks on www.MoneySmart.sg

Click to Compare Singapore Home Loans, Car Insurance and Credit Cards on our other sites.

More From MoneySmart

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • ToyotaPH continues it’s strong sales in February
    ToyotaPH continues it’s strong sales in February

    Toyota Motor Philippines (TMP) sustains its strong sales in its February performance. Toyota’s strong performance last month was due to the  high demand of the Vios, with sales of 2,012 units and of course the rest of Toyota’s line up such as the Fortuner, Innova, Wigo, Hilux, Avanza and Corolla Altis. Toyota’s luxury brand, Lexus, recorded 60 units last month. …

  • No apology, but Noy seeks understanding
    No apology, but Noy seeks understanding

    There was no apology, but President Aquino yesterday expressed regret, took “full responsibility” and appealed to the nation for “deepest understanding” for the Jan. 25 Mamasapano raid in which dozens died, including 44 police Special Action Force (SAF) commandos. “To every Filipino who has felt failure or has been hurt because of the events related to this operation, it is with abiding humility that I ask for your deepest understanding,” Aquino said in a speech before the 246 new graduates of …

  • MVP on endorsement: Thanks, I’m no politician
    MVP on endorsement: Thanks, I’m no politician

    Businessman Manuel V. Pangilinan is grateful for Sen. Miriam Defensor-Santiago’s praise and presidential endorsement, but says he is not a politician. In an interview on the sidelines of the launch of the search for The Outstanding Young Men (TOYM) of the Philippines 2015 Wednesday night, Pangilinan dismissed the idea of running for president in the 2016 elections. “I’m not a politician, I’m just an ordinary business person,” he added. Santiago endorsed Pangilinan as a presidential candidate …

  • No Lenten break in operations vs lawless groups – AFP
    No Lenten break in operations vs lawless groups – AFP

    The Armed Forces of the Philippines (AFP) is not suspending its offensive against the Abu Sayyaf, New People’s Army (NPA) and other lawless groups during the Holy Week, an official said yesterday. Lt. Col. Harold Cabunoc, AFP public affairs office chief, said the AFP leadership is leaving it up to area and division commanders whether to raise the alert status in preparation for the Holy Week. Those deployed in areas where there are ongoing law enforcement operations against terrorist groups …

  • Probe harassment vs human rights lawyer, CA orders AFP
    Probe harassment vs human rights lawyer, CA orders AFP

    The Court of Appeals (CA) has ordered the Armed Forces of the Philippines (AFP) to investigate a human rights lawyer’s claim of harassment, including surveillance, by several military officers. In a 22-page decision, the former Special Sixth Division of the appellate court granted the petition for writ of amparo and habeas data of Maria Catherine Dannug-Salucon. The CA ordered the AFP to identify the officers behind the surveillance and file charges against them. The CA ruling said …

  • Noy vows to dismantle bata-bata system in PNP
    Noy vows to dismantle bata-bata system in PNP

    President Aquino vowed yesterday to dismantle the culture of factionalism or the bata-bata system within the Philippine National Police as he continued the search for the next PNP chief. Speaking at the Philippine National Police Academy (PNPA) commencement exercises here, the President said the country needed solidarity among leaders and members of the police force so that the policemen would be effective protectors of Filipinos. “Our challenge to the next chief of our national police force: …

  • Envoy to expats: Retire, invest in Phl
    Envoy to expats: Retire, invest in Phl

    Retire and invest in real estate in the Philippines, especially now that the country has made it to the top 10 retirement destinations in the world. This is the message being spread by the Philippine embassy in Washington, with Ambassador Jose Cuisia Jr. leading the refrain in meetings with various Filipino-American communities in the US. In his talks, Cuisia said that an affordable cost of living as well as warm climate and people are just some of the things that make the Philippines a top …

  • PNPA spotlight falls on Ampatuan grandson
    PNPA spotlight falls on Ampatuan grandson

    The stigma of being a namesake of the principal suspect in the 2009 Maguindanao massacre did not prevent Cadet First Class Andal Ampatuan III from entering and graduating from the Philippine National Police Academy (PNPA). Ampatuan III, now with a rank of police inspector, is a grandson of former Maguindanao governor Andal Ampatuan Sr. The younger Ampatuan was among the 246 graduates of the PNPA “Lakandula” Class of 2015. Ampatuan III’s mother is Bai Rebecca Ampatuan, a daughter of the …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options