Redas seeks longer project sales period for land acquired before latest cooling measures

Redas’ suggestions come after property cooling measures were put in place on Dec 16, 2021 amid concerns that rising property prices were unsustainable.  ST PHOTO: CHONG JUN LIANG

Updated from : The Business Times, 9 Feb 2022

THE Real Estate Developers’ Association of Singapore (Redas) hopes that the government will extend the sales period of projects under the additional buyer’s stamp duty (ABSD) requirements on land acquired before Dec 16, 2021, it said on Wednesday (Feb 9) at its annual spring festival celebration.

The association also hopes that the government will tweak the formula of land ABSD to be based on unsold units as is the case of the qualifying certificate, said Redas president Chia Ngiang Hong.

“The quantum of increase in ABSD is hefty, especially the revised land ABSD rate of 35 per cent on developers who already work on thin margins and battling rising construction costs,” he said.

“Sales of units are expected to slow down due to the significant hike in ABSD rates for second and subsequent home purchases, as well as on foreigners. Coupled with a ramped-up Government Land Sales (GLS) supply by the government, developers are concerned that they may not be able to sell all units in their current projects under the revised ABSD framework within the stipulated 5-year timeline,” Chia added.

This comes after property cooling measures were put in place on Dec 16, 2021 amid concerns that rising property prices were unsustainable. Among the changes was an increase in the ABSD rate to 35 per cent from 25 per cent for developers purchasing any residential property.

At the time, Redas said that the cooling measures were “rather unexpected” and that the revised ABSD rate would “impose immense additional pressure” on housing developers’ land acquisition.

At the spring festival celebration, Minister for Culture, Community and Youth and Second Minister for Law, Edwin Tong, said the government understood the association’s concerns and that significant uncertainties remain.

However, he noted that property prices have remained elevated as private housing prices have risen about 9 per cent over the period of the Covid-19 pandemic since the first quarter of 2020.

Tong also noted the risks of upward market momentum and property prices running ahead of market fundamentals and impacting housing affordability.

“We will also take on board what the president has said and work with Redas. We don’t work in a silo, we take on board the views and constantly look at refining, if possible, these measures, and take steps to ensure that the market remains buoyant, remains sustainable, and certainly has a longer term vision beyond just the immediate future,” he said.