Singapore Additional Buyer Stamp Duty 2023 April

On 26th April 2023 just before the strike of midnight, Singapore announced yet another property cooling measure aimed at preventing property prices from being pushed up by investors and prioritizing Singaporeans buying homes for owner-occupation.

Let’s dive straight into the followings:

1) How does this affect you and the market?

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

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

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

5) Closing Thoughts

1) How does this affect you and the market?

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

Let me explain why, Singaporean 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?

Foreigners to avoid paying 60% ABSD, the solution is to become a Singapore PR. Look at the chart, it is so obvious the solution is being a Singapore PR, the 1st property private purchase is only 5% compared to 60% which is a massive saving. My assumption with high net-worth foreigners purchasing Singapore private property will be easily granted a PR status (those capable to pay 20% – 25% -30%, over the years are likely to have very strong financial and influential status). Thus it is a waiting game.

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

Ready home buyers with strong financial means will not be deterred by this latest cooling measure. EL Development sold over 200 units out of 275 at its project Blossoms By The Park. This translates to a take-up rate of 73%. The average price of units sold was $2,423 psf. On the other option, couples use the de-coupling method to enable husband and wife, to own property under their individual names. Buyers will reassess their finances before deciding on a property purchase. With higher ABSD for Singaporean’s 2nd property purchase, it has jolted homeowners to sell first before buying their next property.

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. Locals buyers will be 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.