Despite being ranked as one of the most expensive cities in the world, most Singaporeans are able to afford their own homes. This is possible due to the extensive measures the government has put in place. Measures such as market regulations and financial subsidies all help Singaporeans to better afford their houses. The homeownership rate in Singapore last year was marked at 88.9%. This high percentage of homeownership has been consistently high in the country for the past decade.
For Singaporean Citizens, there are generally three main types of property in Singapore that they can buy. These are namely Housing and Development Board (HDB) Flats, private properties and Executive Condominiums (ECs). Whenever a person sells or buys a property in Singapore, they will be subjected to a tax known as Buyer’s Stamp Duty (BSD). The buyer may also be required to pay an additional tax known as Additional Buyer’s Stamp Duty (ABSD) depending on the buyer’s current profile (i.e residency status and the number of properties they currently own).
“New” Cooling Measures
In December last year, the ABSD rates were revised along with the announcement of new cooling measures. ABSD rates have increased by 10% for foreigners buying any residential property in Singapore and 5% for Singapore citizens buying their second residential property. This increase in ABSD rates aim to reduce the demand for property among foreigners thus providing more supply for Singaporeans and Permanent Residents (PRs) who are looking to buy their first residential property in Singapore. In May 2022, the Ministry of Finance announced that any transfer of residential property into a living trust will be subject to an ABSD of 35%.
ABSD rates (updated on 16 December 2021) are as follows:
Buyer Profile | ABSD payable (on or after 16 December 2021) |
Singapore Citizen buying first property | 0% |
Singapore Citizen buying second property | 17% |
Singapore Citizen buying third and subsequent properties | 25% |
By studying the table above, and analysing the demand for non-landed properties from Singapore Citizens leading up to the implementation of the new ABSD rates, we can see how changes in ABSD have affected the market.
| Before 8 Dec 2011 | 8 Dec 2011 to 11 Jan 2013 | 12 Jan 2013 to 5 Jul 2018 | 6 Jul 2018 to 15 Dec 2021 | Since 16 Dec 2021 |
Singapore citizens buying 2nd residential property | 0% | 0% | 7% | 12% | 17% |
*Source: Inland Revenue Authority of Singapore
For Singaporeans, the percentage of Core Central Region (CCR - a division of the district that groups Singapore into three regions) purchases have been on the rise since ABSD was introduced when purchasing a second property. In an environment where ABSD rates are constantly revised and increased, Singaporeans generally believe that their market share will increase over time too. This is particularly true for those who purchased or are planning to buy a property within the CCR.
From feedback gathered, the majority of Singaporeans are unwilling to pay the extra ABSD fees for their second private home purchase, as further increases to ABSD rates on subsequent purchases seemingly make little sense in the medium to long term.
Unlike Singaporeans, PRs cannot legally purchase a Build-To-Order (BTO) flat directly from the HDB. To be eligible, for a BTO, the PR must first become a Singaporean or marry a Singapore Citizen. However, PRs are eligible to purchase resale HDB flats without the need to marry a Singapore Citizen.
| Before 8 Dec 2011 | 8 Dec 2011 to 11 Jan 2013 | 12 Jan 2013 to 5 Jul 2018 | 6 Jul 2018 to 15 Dec 2021 | Since 16 Dec 2021 |
PRs buying 1st residential property | 0% | 0% | 5% | 5% | 5% |
There have been no significant changes to the ABSD rates since 2013 for PRs purchasing properties. What is interesting to note is that there is a slight increase in the percentage of PRs purchasing their first residential property since the latest ABSD recalibrations.
With the current ABSD rates offered, the property supply for Singapore citizens and PRs to purchase their first residential property has increased. As a Singaporean Citizen or PR, with all these measures in place to safeguard your interest, are you ready to purchase your first residential property in Singapore?
- Written by: Patricia Shareleen, Cayman Management Consultants
- Edited by: Fang Wenting, Cayman Management Consultants
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