Cities like Vancouver and Singapore, which have till now been living in a real estate bubble, have started punishing foreign investors in housing. The real estate market for foreign investors has begun to see a slump due to the levying of a number of taxes on these foreign investors.
Property prices have rocketed sky high making it unsustainable and unaffordable. The most expensive and popular locations will be hit the hardest. The trend is going to have worldwide repercussions. The real estate bubble is going to burst on a global scale. As of now, Singapore is the worst hit.
The real estate market in Singapore has seen a sharp decline of 21.5%. A hefty tax of 26% was levied on foreign buyers. Another 12% to 16% of surcharge was imposed on those foreign buyers who had ‘flipped’ their houses after 1 or 2 years. The act of buying something at a lower price and then selling it at a higher price after reconditioning it is known as flipping.
Flipping houses causes a bubble burst. Similar measures were taken in Vancouver also and a very similar thing happened there. In just 5 months, its real estate market saw a collapse of 24%. Bubble bursts cause dramatic and rapid crashes. Chances are, this is only the beginning.
Singapore has the most expensive real estate market in the world. It records the highest standard of living in the whole of Asia. It is even higher than that of America. Singapore’s real estate problems arise from the fact that it has very limited land and 100% of its population is urban.
Before the recent crash in the real estate market of that country, real estate prices had climbed by 68% since 2009 after the global economic depression. If figures are to be calculated from 1999, the real estate prices had seen a rise of 110% following the economic crisis in Southeast Asia. After making so much gain, the prices are down by 21.5%. But prices are still 40% higher than before.
The public seethed against the foreign buyers because they were to blame for the rise in real estate prices. It was becoming increasingly difficult for households with expenses of $60,000 in a year to survive in their own city. So it is official that the real estate bubble is actually bursting worldwide. It is an extremely worrying state of affairs.