Just yesterday, the Government announced that the Additional Buyer’s Stamp Duty (ABSD) rates will increase by 5 percentage points for foreigners, and 10 percentage points for entities, including companies, and Loan-to-Value (LTV) limits will also be toughened. This is to cool the property market and keep prices in line with economic fundamentals.
The ABSD rates for Singapore citizens and Singapore permanent residents who are purchasing their first residential property remains at 0 and 5 per cent respectively. However, ABSD rates for Singapore citizens who are buying their second residential property will increase from 7 per cent to 12 per cent, and ABSD rates for those who are buying their third or subsequent residential property will increase from 10 per cent to 15 per cent.
An additional ABSD of 5 per cent that is non-remittable will also be introduced for developers buying residential properties for development.
“Not only would the 5 per cent ABSD increase the cost of land acquisition, it would also reduce the bullishness of tender bids, and deflate the en bloc sale market,” said ZACD Executive Director and Chief Investment Officer, Nicholas Mak.
“The collective sale fever will be adversely affected as the change adds to both the costs to developers and to sellers who need to buy replacement homes”, said Nicholas.
Nicholas said in a note, “This round of cooling measures is heavy-handed for a residential property market that’s barely into its first year of recovery. It is like strangling the baby in the cradle.”
“Based on the land parcels that were sold in the past two years, there are some 28,000 to 30,000 private residential housing units that could be developed for launched in the next two years. As such, private residential price growth and developers’ sales will slow down, and prices may even start to stagnate by the end of this year,” he added.
Nicholas believes the new measures are premature, saying it might hasten an oversupply of units in the market as cautious investors put off their purchases.
Read the full articles on the ABSD rates by clicking on news articles below:
‘Government introduces new round of property cooling measures’ on TODAYonline, Singapore Section, 6 July 2018.
‘Higher stamp duties, tighter loan limits for home purchases’ as published in The Straits Times, Homepage, 6 July 2018.
‘Rush to buy homes as cooling measures hit property market’ as published in The Business Times, Homepage, 6 July 2018.
‘Singapore developer stocks fall after surprise property curbs’ as published on TODAYonline, Singapore Section, 6 July 2018.
‘Singapore developer stocks may fall on surprise property curbs’ as published in The Business Times, Top Stories Section, Page 2, 6 July 2018.
‘分析师感惊讶： 政府出手太重市场情绪首当其冲’ as published in Lianhe Zaobao, Finance Section, Page 26, 6 July 2018.
‘房地产降温措施间隔五年再度出台’ as published in Lianhe Zaobao, Homepage, 6 July 2018.