Desmond Lee Says ABSD Hike Meant To Dampen Investment Demand
On Wednesday (26 Apr), the Ministry of National Development (MND), Monetary Authority of Singapore (MAS) and Ministry of Finance (MOF) released a joint statement announcing the hike in the Additional Buyer’s Stamp Duty (ABSD) rates.
Speaking to reporters on Thursday (27 Apr), Minister for National Development Desmond Lee said that the measure aims to slow down property investment demand.
Source: Shin Min Daily News on Facebook
Additionally, he said that the new rates will prioritise Singaporeans — by ensuring that there will be enough homes for owner-occupation.
ABSD raise triggered by renewed investment interest: Desmond Lee
The Straits Times (ST) reported that Mr Lee spoke about the ABSD hike earlier today (27 Apr).
He said that investors — both in Singapore and overseas — have renewed their interest in the nation’s property market.
Due to the increased demand, private property prices have climbed by 3.3 per cent in the first quarter of this year.
Source: Winel Sutanto on Unsplash. Image for illustration purposes only.
He also noted that 7 per cent of all property purchases during this period were made by foreigners.
“Foreign interest in residential property in Singapore, as an asset class, continues to be strong,” he said.
“And therefore, if we don’t take early preventive measures, we may see investment numbers both by locals and by foreigners grow…”
Therefore, the hike will help to relieve the stress on Singaporeans who want to buy a home to live in.
According to Channel News Asia (CNA), the new measures will affect around 10 per cent of all private property transactions.
ABSD rates increased as a ‘cooling measure’
Following the rate revisions, foreigners face the highest increase in ABSD rate from 30 per cent to 60 per cent.
Meanwhile, Singaporeans purchasing their second residential property will pay an ABSD rate of 20 per cent.
Source: Ivan Yeo on Unsplash. Image for illustration purposes only.
Beyond the second property, Singaporeans will have to pay a higher rate of 30 per cent — five per cent more than the previous rate.
The same rate applies to permanent residents (PR) buying their second residential property.
However, PRs will also need to account for an additional five per cent for their third and subsequent property — bringing it up to 35 per cent.
Cooling measures ahead of uncertain environment
ST reported that the cooling measures are meant to stop property transactions involving foreign investors from growing significantly.
Furthermore, Mr Lee noted that there is still a lingering impact on the construction industry due to Covid-19.
This, in turn, affects the property supply in Singapore.
Mr Lee also commented on the difference in percentage rates for foreigners and Singaporeans.
He stated that, unlike foreign investors, Singaporeans are “very sensitive to changes in ABSD”.
Therefore, a small increase should be enough to dampen investment demand from the local group.
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Featured image adapted from Jiachen Lin on Unsplash for illustration purposes only.
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