Singapore raises ABSD stamp duties to cool property market

SINGAPORE — Singapore is raising taxes for property purchases amid concerns that surging prices “could run ahead of economic fundamentals.”

In a fresh round of cooling measures announced late Wednesday, the government said both local and foreign buyers of residential properties will now have to pay higher additional buyers’ stamp duties. The changes will take effect from today, the authorities said.

This will be the third round of cooling measures by Singapore following previous similar moves.

Earlier measures taken in December 2021 and September last year had a “moderating effect,” the government said. Still, “property prices showed renewed signs of acceleration amid resilient demand” in the first three months of the year.

“Demand from locals purchasing homes for owner-occupation has been especially strong, and there has also been renewed interest from local and foreign investors in our residential property market,” the Ministry of Finance, National Development Ministry and Monetary Authority of Singapore, said in a joint statement.

“If left unchecked, prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes.”

The biggest jump is the doubling of stamp duties for foreign buyers from 30% to 60%, which will help to “moderate investment demand,” the government said.

The latest measures “were not a surprise,” analysts at Citigroup said in a note, but they called the doubling of taxes on foreigners “draconian” given foreign purchases were hovering at just between 5% to 7% in the past 4 quarters.

According to a research report by OrangeTee & Tie last year, Singapore remains a top investment destination among foreign investors.

“Despite the recent interest rate hikes and cooling measures implemented in December 2021, foreign buyers purchased more luxury condos priced at S$5 million [$3.74 million] and above this year,” the report noted.  

“Luxury condo purchases by foreigners and Singapore PRs have almost returned to the pre-pandemic levels,” in 2019, it added.

Real estate stocks were the biggest losers in Singapore on Thursday. City Development fell 5.74%, UOL Group dropped 4.9% while Keppel Corp was down 4.4%.