Housing affordability and property cooling measures

New Property Cooling Measures

On 26 April 2023, the Singapore government announced its latest property cooling measure. In this round, the Additional Buyer Stamp Duty (ABSD) was increased substantially, especially for foreign and entity buyers. In comparison, the previous round of cooling measures on Valentine’s Day was a mere 2% increase in Buyer Stamp Duty for properties above S$1.5 million.

The new rates appear to deliberately target the foreign buyers of residential properties in Singapore, many of whom have made the headlines recently. Just two weeks ago, it was reported that Cuscaden Peak Investments had sold three Good Class Bungalows in Nassim Road for more than S$200 million to Indonesian buyers. In February this year, a duplex penthouse in Klimt Cairnhill was sold for S$27.5 million to a Chinese buyer.

Source: Edgeprop 24 April 2023

According to transactional data extracted by Edgeprop, foreigners make up 7.78% of total residential property transactions in March, with nearly two-thirds favouring properties above S$2 million. However, it may not be clear how many of such foreigners were affected by the ABSD as Singapore does accord some foreigners the same Stamp Duty treatment as Singapore Citizens. With the new ABSD rates, it is likely that the pool of foreigners buying Singapore residential properties will diminish. However, foreigners intending to acquire assets in Singapore may shift their focus to commercial and industrial properties which do not incur any ABSD.

Are Singapore Properties Affordable?

Property prices had risen steadily over the last two decades. In order to maintain a sustainable growth in property prices, the Singapore Government had implemented a slew of property cooling measures since 2009. Comparing the property price index and the nominal income index, it can be seen that the Singapore Government had been successful in moderating the residential property prices in Singapore. During periods where property price growth had exceeded income growth, the government had stepped in to apply cooling measures. With such measures, the government hopes that residential property in Singapore will continue to be affordable for all Singapore residents. Singapore residential property prices will continue to appreciate, as long as the income for Singapore residents continue to rise.