The Government has announced increases in the Additional Buyer’s Stamp Duty (ABSD) rates to promote a sustainable property market. The revised rates will take effect from 27 April 2023.
Although the implementation of the property cooling measures in December 2021 and September 2022 has had a moderating effect, property prices in 1Q2023 have shown renewed signs of acceleration amid resilient demand.
Demand from locals purchasing homes for owner-occupation has been especially strong, and there has also been renewed interest from local and foreign investors in Singapore’s residential property market. If left unchecked, prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes, warned the government.
Raising Additional Buyer’s Stamp Duty (ABSD) Rates
The hike in ABSD is to promote a sustainable property market and prioritise housing for owner occupation. As such, the government has raised the ABSD rates further to pre-emptively manage investment demand.
The specific ABSD rates increases are as follows:
- Raise ABSD rate from 17% to 20% for Singapore Citizens (SCs) purchasing their 2nd residential property;
- Raise ABSD rate from 25% to 30% for SCs purchasing their 3rd and subsequent residential property, and Singapore Permanent Residents (SPRs) purchasing their 2nd residential property;
- Raise ABSD rate from 30% to 35% for SPRs purchasing their 3rd and subsequent residential property;
- Raise ABSD rate from 30% to 60% for foreigners purchasing any residential property; and
- Raise ABSD rate from 35% to 65% for entities or trusts purchasing any residential property, except for housing developers.
Based on 2022 data, the above ABSD rate increases will affect about 10% of residential property transactions.
The ABSD rates for SCs and SPRs purchasing their first residential property, which constitutes about 90% of residential property transactions based on 2022 data, will remain unchanged at 0% and 5% respectively.
For acquisitions made jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply.
Married couples with at least one SC spouse, who jointly purchase a second residential property, can continue to apply for a refund of ABSD, subject to conditions.
These conditions include selling their first residential property within 6 months after (a) the date of purchase of the second residential property if this is a completed property, or (b) the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property, whichever is earlier, if the second property is not completed at the time of purchase.
The ABSD currently does not affect those buying an HDB flat or Executive Condominium unit from housing developers with an upfront remission, if any of the joint acquirers/purchasers is a SC. This policy remains unchanged.
The revised ABSD rates will apply to all residential properties acquired on or after 27 April 2023. There will be a transitional provision, where the ABSD rates on or before 26 April 2023 will apply for cases that meet all the conditions below:
- The Option to Purchase (OTP) was granted by sellers to potential buyers on or before 26 April 2023;
- This OTP is exercised on or before 17 May 2023, or within the OTP validity period, whichever is earlier; and
- This OTP has not been varied on or after 27 April 2023.
Correspondingly, the Additional Conveyance Duties for Buyers (ACDB), which applies to qualifying acquisitions of equity interest in property holding entities (PHEs) will be raised from up to 46% to up to 71%.
Significant Increases in Housing Supply
The revisions to the ABSD rates are to help moderate investment demand and will complement the government’s efforts to ramp up supply. This is aimed at alleviating the tight housing market for both owner-occupation and rental.
Hence, there will be an increase in the supply of private housing on the Confirmed List to 4,100 units for the 1H2023 Government Land Sales (GLS) programme, from 3,500 units for 2H2022.
In 2022, there was an injection of a total of 6,300 units under the Confirmed List. For public housing, more than 23,000 flats were launched in 2022, and up to 23,000 flats in 2023.
The government said they are prepared to launch up to 100,000 new flats in total between 2021 to 2025. This is to maintain a steady supply to meet the growing housing demand.
While COVID-19 had led to severe delays across private and public housing projects, progress has been made to get supply back on track, the government said. With almost 40,000 public and private residential property completions in 2023, and nearly 100,000 units expected to be completed from 2023 to 2025, the significant housing supply coming onstream over the next few years should keep the rise in property prices at a more even keel.
Overall, the property cooling measures are calibrated to moderate housing demand while prioritising owner-occupation and providing sufficient housing supply. At the same time, the government will continue to adjust housing policies, whenever necessary, to ensure and promote a sustainable property market in the long-term.
Upcoming New Property Launches
The latest property cooling measures, like in the past, will likely prompt potential buyers to move to the sidelines to observe how they will affect the market.
Hence, it will be interesting to observe how a slew of upcoming new launches (see below) will fare.
- Newport Residences, a freehold mixed development at Anson Road.
- Skywaters Residences, a mixed opposite Tanjong Pagar MRT station.
- TMW Maxwell, a mixed development opposite Maxwell Food Centre.
- The Hill @ One-North, a mixed development near Buona Vista MRT station.
- Grand Dunman, a mega condo next to the Dakota MRT station by SingHaiyi Group.
- Pinetree Hill, a condominium near the scenic Sungei Ulu Pandan.
- The Reserve Residences, a mixed-use development at Beauty World.
- Lentor Hills Residences, a condo development a short walk from Lentor MRT station.
- J’Den, a 40-storey mixed-use development at Jurong Lake District.
- Altura, an executive condo near Bukit Gombak MRT station.