The Government announced today 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.
The implementation of the property market measures in December 2021 and September 2022 have had a moderating effect. However, in 1Q2023, property prices showed 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 our 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.
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. There will be no change to this policy.
The implementation of the property market measures in December 2021 and September 2022 have had a moderating effect. However, in 1Q2023, property prices showed 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 our 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.
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. There will be no change to this policy.
To promote a sustainable property market and prioritise housing for owner-occupation, the Government will raise the ABSD rates further to pre-emptively manage investment demand.
The specific ABSD rates increases are as follows:
a. Raise ABSD rate from 17% to 20% for Singapore Citizens (SCs) purchasing their 2nd residential property;
b. 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;
c. Raise ABSD rate from 30% to 35% for SPRs purchasing their 3rd and subsequent residential property;
d. Raise ABSD rate from 30% to 60% for foreigners purchasing any residential property; and
e. Raise ABSD rate from 35% to 65% for entities or trusts purchasing any residential property, except for housing developers.
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:
a. The Option to Purchase (OTP) was granted by sellers to potential buyers on or before 26 April 2023;
b. This OTP is exercised on or before 17 May 2023, or within the OTP validity period, whichever is earlier; and
c. This OTP has not been varied on or after 27 April 2023
The specific ABSD rates increases are as follows:
a. Raise ABSD rate from 17% to 20% for Singapore Citizens (SCs) purchasing their 2nd residential property;
b. 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;
c. Raise ABSD rate from 30% to 35% for SPRs purchasing their 3rd and subsequent residential property;
d. Raise ABSD rate from 30% to 60% for foreigners purchasing any residential property; and
e. Raise ABSD rate from 35% to 65% for entities or trusts purchasing any residential property, except for housing developers.
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:
a. The Option to Purchase (OTP) was granted by sellers to potential buyers on or before 26 April 2023;
b. This OTP is exercised on or before 17 May 2023, or within the OTP validity period, whichever is earlier; and
c. This OTP has not been varied on or after 27 April 2023
Information compiled by Huttons Asia - the largest private real estate agency in Singapore
The rate hike for foreigners was much larger than that for locals to achieve an effective dampener on investments from abroad because in the past one year, there has been an increase in the proportion of foreigners buying residential properties in Singapore. From a low of 3.1% in 1Q 2022, this proportion has increased steadily to hit 6.9% in 1Q 2023. This is the highest since 1Q 2018 when the proportion was 7.3%.
"The increased interest from foreigners towards residential property in Singapore, as an asset class, continues to be strong and such early preventive measures are necessary as the rapid rise of property prices will add stress to Singaporeans who are looking to buy residential property principally for their own occupation” said real estate market watcher Kiwi Lim.
Foreigners are likely to rent for the moment while they apply for their permanent residency or citizenship. Anecdotally there are foreigners who rent with an option to purchase the home once they become PR or citizen. The rental market is expected to pick up in the coming months and rents are estimated to rise more than 8% in 2023.
Upcoming mass market and city fringe residential condo projects are likely to go ahead with their launches as the buyers are predominantly Singaporeans and PRs. The high-end market which is targeted at more foreigners may hold back for the time being for the market to absorb the impact of the announcement, e.g. Newport Residences which is expected to be launched this Sat on 29 April.
"The increased interest from foreigners towards residential property in Singapore, as an asset class, continues to be strong and such early preventive measures are necessary as the rapid rise of property prices will add stress to Singaporeans who are looking to buy residential property principally for their own occupation” said real estate market watcher Kiwi Lim.
Foreigners are likely to rent for the moment while they apply for their permanent residency or citizenship. Anecdotally there are foreigners who rent with an option to purchase the home once they become PR or citizen. The rental market is expected to pick up in the coming months and rents are estimated to rise more than 8% in 2023.
Upcoming mass market and city fringe residential condo projects are likely to go ahead with their launches as the buyers are predominantly Singaporeans and PRs. The high-end market which is targeted at more foreigners may hold back for the time being for the market to absorb the impact of the announcement, e.g. Newport Residences which is expected to be launched this Sat on 29 April.
Information compiled by Huttons Asia - the largest private real estate agency in Singapore
The majority of buyers are sensitive to changes in ABSD which means rental and EC markets are likely to see more demand after this announcement. HDB owners who are married couples thinking of buying a second property may likely sell off their HDB flat and rent in the interim before buying two properties under each person's name.
With the latest increase of Additional Buyer Stamp Duty (ABSD) rates, buyers will be more interested in dual-key units like the 4 bedroom dual-key units at Piccadilly Grand - a fully integrated city fringe condo offering ultimate convenience.
A dual-key condo is a type of condominium unit that has two separate entrances, allowing for two separate living spaces within the same unit. This can be useful for people who want to have a separate living area for guests, renters, or family members, while still having the privacy of their own living space. The two living spaces is separated by a wall with different floor plans and amenities. These dual-key condo units are divided into two sub-types, typically sharing a common foyer area and many of these dual-key condos come with a mini kitchen in one sub unit and a full kitchen in another larger unit.
An increase of between 3 per cent and 5 per cent in rates may cause a knee jerk effect lasting from 3 months to 6 months before the market bounce back again. This latest announcement of ABSD increase may also push buyers towards non-residential properties, e.g. offices, industrial factories or commercial strata shops like the freehold shops in The Promenade at Pelikat which can be used for F&B takeaway / bakery / education / retail in the matured estate of Kovan. Investors may be excited with the prospect of property investing with no ABSD, no SSD and no fuss rental as the tenant usually do their own renovations at own cost and are obligated to reinstate back to original state when they leave.
As investment numbers both by locals and by foreigners rise for residential real estate properties in Singapore, the ABSD rate hikes will likely affect about 10% of all private residential property transactions - involving foreign investors as well as those buying their second and subsequent property.
With the latest increase of Additional Buyer Stamp Duty (ABSD) rates, buyers will be more interested in dual-key units like the 4 bedroom dual-key units at Piccadilly Grand - a fully integrated city fringe condo offering ultimate convenience.
A dual-key condo is a type of condominium unit that has two separate entrances, allowing for two separate living spaces within the same unit. This can be useful for people who want to have a separate living area for guests, renters, or family members, while still having the privacy of their own living space. The two living spaces is separated by a wall with different floor plans and amenities. These dual-key condo units are divided into two sub-types, typically sharing a common foyer area and many of these dual-key condos come with a mini kitchen in one sub unit and a full kitchen in another larger unit.
An increase of between 3 per cent and 5 per cent in rates may cause a knee jerk effect lasting from 3 months to 6 months before the market bounce back again. This latest announcement of ABSD increase may also push buyers towards non-residential properties, e.g. offices, industrial factories or commercial strata shops like the freehold shops in The Promenade at Pelikat which can be used for F&B takeaway / bakery / education / retail in the matured estate of Kovan. Investors may be excited with the prospect of property investing with no ABSD, no SSD and no fuss rental as the tenant usually do their own renovations at own cost and are obligated to reinstate back to original state when they leave.
As investment numbers both by locals and by foreigners rise for residential real estate properties in Singapore, the ABSD rate hikes will likely affect about 10% of all private residential property transactions - involving foreign investors as well as those buying their second and subsequent property.
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