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Singapore Property ABSD – Additional Buyer Stamp Duty Increase 2023 April

Posted by Lee Kian Meng on April 27, 2023
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Singapore property ABSD – additional buyer stamp duty,

On the night of April 26, 2023, just moments before the stroke of midnight, a new set of measures aimed at cooling the Singapore property market, particularly focusing on Additional Buyer’s Stamp Duty (ABSD), was announced. The objective is to curb the inflation of property prices driven by investors, with a focus on prioritizing Singaporean individuals purchasing homes for personal residence.

Let’s dive straight into the following:

1) How does this affect you and the market?

In short, not much. The key heated question the majority would like to know is whether the prices of private property are over the curve and tapered off a little. The answer is unlikely.

Let me explain why, Singaporeans purchasing 2nd home with 17% ABSD until 26th April 2023 have been quite not affected, as every incremental is small. Like the frog in the boiling pot analogy.

The biggest incremental is foreigners purchasing any private property, a whopping 50% increase from 30% to 60%. There is some analysis view that this would likely have a drastic impact on foreign transactions in the coming months. In my opinion, it may not, read further to find out why.

2) How to avoid ABSD in 2023 legally, for foreigners buying Singapore private property?

To circumvent the hefty 60% Additional Buyer’s Stamp Duty (ABSD), foreigners can consider becoming Singapore Permanent Residents (PR). Upon examining the chart, it becomes evident that acquiring Singapore’s PR status is the key solution. The initial ABSD rate for the first private property purchase is merely 5%, representing significant savings compared to the substantial 60% for non-PR individuals. I presume that high net-worth foreigners investing in Singapore private properties may find it relatively easy to attain PR status, especially those who have consistently demonstrated financial capability by paying 20%, 25%, or 30% over the years. Consequently, this becomes a waiting game for potential property buyers.

3) How does this 2023 cooling measure affect you as a Singaporean purchasing private property?

Despite the recent cooling measure, prospective homebuyers with robust financial capabilities remain undeterred. Notably, EL Development achieved remarkable success, selling over 200 units out of 275 in its Blossoms By The Park project, reflecting an impressive take-up rate of 73%. The average selling price per square foot (psf) stood at $2,423. Conversely, some couples opt for the de-coupling method, allowing spouses to individually own properties. Buyers are now more inclined to reassess their financial situations before making any property-related decisions. The heightened Additional Buyer’s Stamp Duty (ABSD) for Singaporeans making a second property purchase has prompted homeowners to consider selling their current property before venturing into their next real estate acquisition.

4) Will home sellers’ and developers’ sales be affected?

Homeowners’ resale units will face a tougher challenge in offloading them, it is likely due to mismatching between asking from home sellers and the expected purchasing price from buyers. Valuations by banks for resale units are not as generous as for new development offered by developers, based on they are new and units under construction are being “forecasted future value”, thus we are now observing developers are selling 2000psf and above easily even in Outside Central Region (OCR). New property launches by developers will see slower sales, which might result in a knee-jerk reaction in the short term. This is observed throughout all Singapore property cooling measures. But good developments may defy all odds to surprise market expectations.

5) Closing Thoughts

The latest cooling measure seems to be targeted at a niche group of buyers. Local buyers will take taking longer time to decide in committing to a 2nd property or replace their current home. Moving ahead, new development pricing strategy from developers will be more cautious if there are good reasons to hold back their launches, they will. For buyers, looking to commit in 2023, always exercise caution, “Buying may be easy, Selling is another story”. For further pointers to cater specifically to your needs, contact me.

Updates 2024: Singapore Budget 2024: ABSD concession extended to single SC seniors aged 55 and above.

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