Buyer’s stamp duty hike to have mild effect on property demand

The top marginal buyer’s stamp duty (BSD) rate hike for residential properties priced over $1 million is expected to have a mild effect on property demand, reported The Business Times.

This comes as most of the residential property deals are below $1.5 million.

Big-ticket purchases, however, are expected to bear the brunt of the BSD rate hike’s impact.

“These include expensive condo units, bungalows and what is happening more rampantly nowadays – land and en bloc property purchases by developers,” said JLL senior consultant Karamjit Singh.

The BSD for a $1.5 million property will increase from $39,600 to $44,600, which works out to an increase of 0.33 percent of the property price. For a $2 million house, the BSD hike translates to 0.5 percent of the purchase price.

The impact of the BSD hike grows with the value of the property.

With this, JLL national director Ong Teck Hui expects some luxury home buyers to calibrate the increase in their purchases.

One industry watcher said buyers may even use the rate hike as a “bargaining point to ask the developer to absorb the higher BSD”.

“In a rising property market, developers could stand firm on this, but for PR reasons, they may agree to absorb at least part of the higher BSD; this should help keep people happy and the buying momentum going.”

At government land tenders of residential sites, Singh, who also serves as chief executive of new homes portal Showsuite, expects developers to price in the one percent hike in the BSD.

“And so theoretically, this will mean a one percent drop in land values, everything else being equal.”

Finance Minister Heng Swee Keat revealed on Monday that the top marginal BSD rate for residential properties priced over $1 million would be increased from three percent to four percent. The change would apply to all residential properties acquired on or after 20 February.

This article was edited by Keshia Faculin.