Singapore’s Latest Property Cooling Measures: Foreign Buyers Face Steeper Stamp Duties (ABSD Doubles)

In an effort to maintain a sustainable property market, the Singapore government has announced a new round of property cooling measures. These measures primarily involve significant increases in Additional Buyer’s Stamp Duty (ABSD) rates, especially for foreign buyers. The new changes took effect on April 27, 2023, and are expected to impact approximately 10% of residential property transactions, based on 2022 data.

Foreign buyers will now face a staggering 60% ABSD, doubled from the previous 30%, making it the steepest increase among the newly announced measures. Singaporeans purchasing their second residential property will see an increase in ABSD from 17% to 20%, while the rate for their third and subsequent properties will rise from 25% to 30%. Permanent residents (PRs) will also be affected, with the rate for their second residential property increasing from 25% to 30%, and from 30% to 35% for their third and subsequent properties.

Entities or trusts purchasing any residential property, with the exception of housing developers, will face a 65% ABSD rate, up from the previous 35%. The primary goal of these measures is to moderate investment demand and promote owner-occupation, while simultaneously increasing the supply of housing for both owner-occupation and rental purposes.

This marks the third round of cooling measures implemented by the Singapore government since December 2021. Although the previous rounds in December 2021 and September 2022 had a moderating effect on the market, property prices showed renewed signs of acceleration in the first quarter of 2023, primarily driven by strong demand from locals for owner-occupied homes and renewed interest from both local and foreign investors.

In response to these concerns, the government has ramped up efforts to increase housing supply through the Government Land Sales programme, raising the number of private housing units on the Confirmed List from 3,500 in the second half of 2022 to 4,100 in the first half of 2023. Additionally, the Housing and Development Board (HDB) will launch up to 23,000 flats in 2023, contributing to the planned 100,000 new flats between 2021 and 2025.

Despite the pandemic causing severe delays to both private and public housing projects, the government has made significant progress, with nearly 100,000 public and private residential units expected to be completed between 2023 and 2025.

These latest measures are designed to strike a balance between moderating housing demand and prioritizing owner-occupation while ensuring an adequate housing supply. The Singapore government remains committed to adjusting policies as needed to maintain a sustainable property market, keeping a close eye on market trends and adjusting accordingly.