Additional Buyer’s Stamp Duty (ABSD) in Singapore

How It Affects the Market and Is It Still Worth Buying?

The Singapore government has recently updated the Additional Buyer’s Stamp Duty (ABSD) rates as part of its ongoing efforts to maintain a stable and sustainable property market. These changes have significant implications for property buyers, particularly investors and foreign buyers. In this blog post, we will explore the updated ABSD rates, their impact on the property market, and whether it is still worth buying property in Singapore.

What is ABSD?

ABSD is a tax imposed on property purchases in addition to the standard Buyer’s Stamp Duty (BSD). It was introduced as a cooling measure to curb excessive property speculation and ensure a stable market. The ABSD rates vary depending on the buyer’s profile and the number of properties owned.

Updated ABSD Rates (Effective May 2024)

The updated ABSD rates are as follows:

• Singapore Citizens (SC):

• First property: 0%

• Second property: 20% (up from 17%)

• Third and subsequent properties: 30% (up from 25%)

• Singapore Permanent Residents (SPR):

• First property: 5% (unchanged)

• Second property: 25% (up from 20%)

• Third and subsequent properties: 35% (up from 30%)

• Foreigners (FR):

• Any property: 60% (up from 50%)

• Entities (including companies):

• Any property: 65% (up from 55%)

Impact on the Property Market

1. Cooling Speculative Demand: The increased ABSD rates are expected to dampen speculative demand, particularly among foreign buyers and investors who own multiple properties. The higher cost of acquisition may deter speculative investments, leading to a more stable and sustainable market.

2. Impact on Foreign Buyers: The substantial increase in ABSD for foreign buyers (from 50% to 60%) makes Singapore properties significantly more expensive for this group. This could reduce foreign investment in the residential property market, potentially impacting the high-end luxury segment the most.

3. Shift in Buyer Profiles: With higher ABSD rates for multiple property owners, there may be a shift in buyer profiles. First-time homebuyers, especially Singapore Citizens and Permanent Residents, might find less competition and slightly better opportunities in the market. However, the impact on affordability remains a concern.

4. Price Stabilization: The updated ABSD rates aim to moderate property price increases by reducing demand from multiple-property owners and foreign buyers. This could lead to more stable price growth in the long term, benefiting genuine homebuyers.

Is It Still Worth Buying Property in Singapore?

Despite the increased ABSD rates, buying property in Singapore can still be a worthwhile investment, depending on individual circumstances and goals. Here are some factors to consider:

1. Long-Term Investment: Singapore's property market is known for its stability and resilience. For long-term investors, the potential for capital appreciation and rental income remains attractive. The country's strong economic fundamentals, political stability, and robust legal framework continue to support property values.

2. First-Time Homebuyers: For Singapore Citizens and Permanent Residents purchasing their first property, the impact of ABSD is minimal. The focus should be on finding a property that meets their needs and offers good value in terms of location, amenities, and potential for future appreciation.

3. Diversification Strategy: For foreign investors, the high ABSD rates necessitate a careful evaluation of the investment. Singapore's property market can still be part of a diversified investment strategy, especially for those seeking a safe and stable environment. However, the cost of entry must be weighed against potential returns.

4. Property Type and Location: The choice of property type and location plays a crucial role in determining the investment's success. Properties in prime locations, near key amenities and transportation hubs, tend to hold their value better and offer stronger rental demand.

5. Government Policies and Market Trends: Staying informed about government policies, market trends, and economic indicators is essential. The property market is influenced by a range of factors, including interest rates, employment rates, and infrastructure developments. Being well-informed helps in making strategic decisions.

Conclusion

The updated ABSD rates reflect the Singapore government's commitment to maintaining a stable and sustainable property market. While the increased rates may pose challenges for investors, particularly foreign buyers, the long-term prospects of the Singapore property market remain positive. For first-time homebuyers and long-term investors, buying property in Singapore can still be a worthwhile investment, provided careful consideration is given to individual circumstances, market conditions, and investment goals.

If you are considering buying property in Singapore and need personalized advice, our team of experts is here to help. Contact us for a consultation and stay informed with our latest market updates by subscribing to our blog.