Government introduces new round of property cooling measures; ABSD for foreign buyers doubles to 60%
Amid resilient demand and a firm property market, the government has announced higher Additional Buyers’ Stamp Duty (ABSD) rates from April 27, 2021.
In order to cool the property market, Singapore citizens will pay a higher rate of 20% ABSD on their second residential property, an increase from 17%. An increased rate of 30% will now be applied on third and subsequent property purchases, up from 25%. Singapore Permanent Residents (PRs) will pay 30% ABSD on their second residential property, while foreigners will have to pay a doubled 60% rate for any residential property purchase. Entities or trusts buying any residential property, excluding housing developers, will now be charged 65% ABSD.
The ABSD includes any residential property owned wholly, partially or jointly with others. It is payable by trustees of any trust when acting in that capacity, with the exception of trustees for a collective investment scheme, trusteemanagers for a business trust and trustees for a housing developer – which are already subject to ABSD (Entity) and ABSD (Housing Developer) respectively when acquiring residential properties.
Housing developers may apply for remission of this ABSD, subject to conditions, with the exception of a 5% ABSD which must be paid upfront upon purchase of residential properties.
The government believes that, if left unchecked, prices could run ahead of economic fundamentals, with a risk of sustained increase in prices relative to incomes. These recent ABSD measures are intended to prevent this from occurring.
In a joint statement, the Ministry of Finance, Ministry of National Development, and the Monetary Authority of Singapore have claimed that December 2021 and September 2022 property market measures have had a moderating effect. In 1Q2023 however prices have shown renewed signs of acceleration, especially with local home buyers and renewed local and foreign investor interest in residential property.
These recent ABSD property measures are an attempt to ensure that prices do not run ahead of economic fundamentals and to prevent a sustained increase in prices relative to incomes.