In Singapore, it has become a tradition to release new property policies late at night. On one occasion before, it was released during the day, resulting in a queue of people buying properties outside major properties in Singapore that afternoon, stretching several kilometres away.
From 27 April, the Buyer's Additional Stamp Duty (ABSD) will double from 30% to 60% when a foreigner buys any home in Singapore.
At the same time, ABSD will be increased from 17% to 20% for Singapore citizens buying a second home, and from 25% to 30% for a third. For Permanent Residents (PR) buying a second home, the ABSD will be increased from 25% to 30%, and from 30% to 35% for a third home. For purchasers using trusts and companies, the ABSD will increase from 35% to 65%.
However, for Singapore citizens and PRs buying their first home, the ABSD remains unchanged. This new policy is good for PRs and citizens buying their first home, as the government still supports the Home Ownership Policy, which aims to combat "property speculation".
Indeed, the government's move has come as a shock to many people. However, it is also an important step taken by the government to maintain the stability and sustainability of the housing market.
By strengthening the regulation of the real estate market, the government hopes to control excessive price rises in the market, avoid the risk of bursting the housing market bubble and ensure that residents and investors can receive reasonable housing prices and stable investment returns.
In addition, the government has retained the same tax policy for citizens and PRs buying their first home in the new policy, aiming to support them in realising their dream of a home.
This policy is a boon for those who plan to buy their first home in Singapore.
The government has also increased the tax rates for citizens, PRs, and trust and company buyers for second and third home purchases as part of its efforts to strengthen the disincentive for "property speculators". These policies are aimed at ensuring that Singapore's housing market remains healthy and sustainable, so that more people can realise their dream of living in Singapore.
In conclusion, these government measures are necessary for Singapore's housing market to avoid the formation of a market bubble and to maintain the stability and sustainability of the market. These policies may cause some degree of inconvenience to some, but it is a necessary move for the long-term development of the community as a whole.
For example, the usual price for buying a condominium in Singapore is at least S$1.5 million.
Prior to 27 April, foreigners were required to pay a 4% stamp duty and a 30% additional stamp duty on the purchase of a property. This means that the purchase of a S$1.5 million condominium would require a tax of S$510,000, which feels more painful but is still affordable.
However, from April 27, foreigners will have to pay 4% stamp duty and 60% additional stamp duty on the purchase of a home. This means that the purchase of a S$1.5 million flat will cost S$960,000 in tax. This figure is quite staggering and unimaginable.
In the last two years, property prices in Singapore have soared and many believe that this has been pushed up by foreigners. However, a closer look at the data reveals that this claim is not accurate. According to data from January to March 2023, foreigners purchased an average of only 110 properties per month. In Singapore, the main force of home purchases is still locals and PRs.
Some analysts believe that with this new wave of policies introduced by the Singapore government, the total SSD tax revenue for foreigners may fall rather than rise. This is because the number of foreigners willing to buy a home in Singapore will be reduced, which also highlights the Singapore government's determination not to "get rich" from the property sector.
With the implementation of the new policy, foreigners will be very restricted in buying property as they will have to pay up to 60% of the ABSD, which has forced many foreigners to give up the idea of buying a home in Singapore. In contrast, PRs are offered much more favourable terms to purchase a property, as they only need to pay 5% of the ABSD.
As a result, more and more people are seeking PR status so that they can enjoy more benefits when buying a property. For those who missed out on the opportunity to purchase a property, they are now feeling regretful and are acutely aware that if they had obtained PR status earlier, they would have been able to save a lot of money on their property purchase.
Foreigners who want to buy a property in Singapore now face higher taxes and huge expenses. Even if they want to buy a property, the new policy has deterred them.
As a result, many foreigners are opting to rent properties. The rental market in Singapore has been booming and not only have rents continued to rise, but the new policy has further increased the market demand. For a S$1.5 million flat, for example, the stamp duty of S$960,000 is sufficient to rent the flat for 192 months/16 years, making renting a more reasonable option.
