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Worried about volatile housing markets across the world, Singapore’s central bank, the Monetary Authority of Singapore (MAS), has warned Singapore residents to be cautious when investing in overseas properties. The bank notes that overseas property investments by Singapore residents have surged by 43% since 2012.

“MAS would like to remind potential investors to be mindful of various risks associated with overseas property purchases,” the central bank said. 

Singapore investors should factor in foreign exchange and interest rate risks before putting money into housing markets overseas, says MAS.  Stringent laws foreign governments impose on expat buyers are another concern. 

'Risks are more difficult to assess or manage when investors are unfamiliar with conditions in overseas markets, such as the prospects for oversupply of properties, or of deterioration in economic conditions,' it added.

MAS said the warning has been issued 'with a view to ensuring financial stability as well as financial prudence among Singaporeans'.

The growing interest of Singapore investors in overseas properties, especially in Australia, the UK and New Zealand, is attributed by experts to government measures to cool Singapore's housing market.

Singapore residents now have to pay the additional buyer’s stamp duty (ABSD)  of 7% when buying their second home. The minimum cash down payment for individuals applying for a second housing loan has been raised to 25%, up from the previous 10%.  The government has also introduced a Seller’s Stamp Duty on industrial properties, to discourage speculative activity in the industrial market. 

This article was republished with permission from Global Property Guide.