Additional stamp duty for private property purchases

To promote a more stable and sustainable market, the government has issued an additional buyer’s stamp duty (ABSD) on the sale of private residential property starting Thursday.

The additional charges, imposed over and above the current Buyer's Stamp Duty, will apply to the purchase price or market value of the property, announced the Ministry of National Development (MND) and Finance (MOF) in a joint statement on Wednesday evening.

But don’t worry if you’re a first-time Singaporean buyer, or if you’re buying a Housing and Development Board (HDB) flat — you’re not affected by these measures.

An ABSD of 10 per cent of the purchase price or market value of the property — whichever is higher — is applicable to foreign buyers and corporate entities, while permanent residents (PRs) buying their second and subsequent properties will face an ABSD of three per cent.

An ABSD of three per cent is only applicable to Singaporeans who are purchasing their third or subsequent properties.

For joint purchases, say between a Singaporean and a PR, or a PR and a foreigner, the higher rate will apply.

However, the government will provide reliefs in certain cases, such as when a Singaporean marries a PR or foreigner, so that this move does not impact home occupation demand by residents, said the ministries.

The move seeks to curb investment demand for private property, in particular from overseas investors, who possess strong buying interest and who cause market volatility, they said.

“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," they noted in the statement.

Foreign purchases accounted for 19 per cent of all private residential property purchases in the second half of 2011, up from 7 per cent in the first half of 2009.

Private residential property prices have also continued to rise and are 16 per cent above the recent peak in 2008.

The existing Buyer’s Stamp Duty on property purchases applies at one per cent on the first $180,000 of the purchase price or market value of the property (whichever is higher), two per cent on the next $180,000 and three per cent for the remainder.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said, “We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low.

"The additional buyer’s stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road,” he added.

Gov't to expand supply of executive condominiums in 2012

Meanwhile, the government also announced plans to expand the current supply of executive condominiums (ECs) next year.

It will inject sites that can yield 14,100 new private housing units, and is also ready to release sites that could yield 5,000 EC units for 2012. Sites for 3,500 EC units will be made available in the first half of 2012.

There are currently 41,000 unsold private housing units available.

“We are ramping up the supply of new EC units through the Government Land Sales Programme," said Minister for National Development Khaw Boon Wan.

"This will help higher-income Singaporeans own private condominium units in an affordable way, as the sale of new EC units is restricted to Singaporean households only," he added.