Additional stamp duties surprise analysts and industry players
by Tan Weizhen
SINGAPORE – To curb excessive investment demand on private homes, the Government is imposing additional stamp duties – over and above the existing tax – on certain categories of property purchases from today.
It also announced yesterday that it will inject sites that can potentially yield a total of 14,100 units in the Government Land Sales (GLS) Programme for the first half of next year. Of these, about 7,000 units will be from sites on the Confirmed List.
The imposition of the additional stamp duties surprised analysts and industry players, with the Real Estate Developers’ Association of Singapore (REDAS) criticising the timing of the cooling measure which comes as the Singapore economy is headed for a slowdown next year.
Foreigners and corporations will be the hardest hit, needing to pay a 10 per cent Additional Buyer’s Stamp Duty (ABSD) on any private residential property.
Singaporeans will pay a 3 per cent ABSD on the third and subsequent properties, while permanent residents (PR) will pay a 3 per cent ABSD on the second and subsequent properties.
Singaporean first-time buyers and upgraders, and buyers of HDB flats will not be affected.
Some relief will be provided to alleviate the impact on affected Singaporeans, for instance those who marry foreigners or PRs and will be subject to the higher ABSD as a couple.
Reliefs will also be provided for qualifying developers and for purchases falling within the scope of Singapore’s international trade agreements.
Details of the reliefs will be provided on the Inland Revenue Authority of Singapore website.
Explaining the move, the Ministry of Finance and the Ministry of National Development said in a joint press statement that “even with the current economic uncertainties, the demand for private residential property remains firm. Given the uncertainty in stock markets and with interest rates remaining low, private property in Singapore continues to attract investors, local and foreign.”
It said: “Excessive investment demand will however make the property cycle more volatile, and thus increase the risks to our economy and banking system.”
The authorities noted that private home prices are currently 13 per cent above the peak in the second quarter of 1996 and 16 per cent above the more recent peak in the second quarter of 2008.
The joint statement added: “A higher ABSD rate for foreign buyers in particular is necessary, in view of the large pool of external liquidity and strong buying interest from abroad, and the relatively small size of the Singapore market.”
Move is ‘drastic’, say analysts
Property analysts described the cooling measure as “drastic”. However, they noted the rising foreign ownership of private homes and increasing prices.
Adding that a very small percentage of Singaporeans own a third home, head of research and consultancy at SLP International Nicholas Mak said: “This is a pre-emptive strike in preventing an increase in buying demand from foreigners, especially the non-residential foreigners.”
Mr Chris Koh, director of Dennis Wee Group, noted that foreign ownership of private properties has increased from 30 per cent last year to 33 per cent to date, pushing prices to unrealistic levels.
However, International Property Advisor chief executive Ku Swee Yong felt the measure “aimed at foreigners may be missing the mark”.
He argued that the recent spike in private home prices – especially in outside central regions (OCR) areas such as Ang Mo Kio, Pasir Ris and Chua Chu Kang – were driven primarily by Singaporeans.
“I worry that the price index will continue to rise (albeit more slowly) while at the same time we leave foreign investors with a bad taste in their mouths,” said Mr Ku. He added: “Many foreigners are here to work and settle their families down and they need to own one home for shelter over their heads.”
REDAS said in a press release that it was “disappointed in the lack of consultation on the latest measures”. It said: “They came as a surprise as the current market outlook is uncertain. The good take up rate in the primary market is driven by the increased number of new launches and unique selling points of certain projects. It is not indicative of a return to a speculative market.”
It added: “Given that the local economy is expected to slow down next year, we believe these measures are untimely.”
On the GLS programme for the first half of next year, the Government said the supply – which is less than the 8,100 units offered under the Confirmed List in the second half of this year – takes into account “the ample pipeline supply and the dampening effect of the ABSD”.
The Government added that it will “continue to monitor the property market and adjust our property policies in step with changes in the market and the economy”.
(via TodayOnline 8 Dec 2011)