‘No rush’ to close property purchases before higher stamp duty deadline

Updated from : The Business Times, 15 Feb 2023

HIGHER marginal Buyer’s Stamp Duty (BSD) for higher-value residential properties kicked in on Wednesday (Feb 15), but agents did not see a rush into the market the night before the change came into effect.

Agencies that The Business Times spoke to observed more than the usual transactions last night after the announcement was made in Budget 2023. But they noted that the increase was not a big one.

They estimated between 40 and 60 units were sold in the hours after Finance Minister Lawrence Wong announced the BSD hike at about 5pm.

For residential properties, the portion of the value of the property in excess of S$1.5 million and up to S$3 million will be taxed at 5 per cent, up from 4 per cent previously. The portion of the value of the residential property that is in excess of S$3 million will be taxed at 6 per cent, also up from 4 per cent previously. The changes are expected to affect 15 per cent of residential properties, and to generate an additional S$500 million in revenue per year. 

Lee Sze Teck, senior director of research at Huttons, estimated the number of units sold in the hours after the announcement to be “around four times more than the number of units sold on Monday”. 

Ismail Gafoor, chief executive officer of PropNex, said a handful of sales transactions were done in some Core Central Region (CCR) and Rest of Central Region (RCR) projects in the evening.

 “But I would not say it was a big rush to buy like what the market saw back in July 2018, when the government announced new cooling measures,” said Gafoor. He was referring to the hike in additional buyer’s stamp duty (ABSD) and tightening of loan-to-value (LTV) limits on residential property purchases that came as a surprise at the time.

“The BSD announcement (in this year’s Budget) probably gave some buyers the impetus to lock in the sales, especially those who have been seriously thinking about purchasing,” he added. 

Nicholas Mak, head of research and consultancy at ERA, said: “A three-bedroom apartment in the Outside Central Region (OCR) is priced around S$1.2 million to S$2 million. If we take the price of S$2 million, the incremental BSD payable under the new regime would be an additional S$5,000 and this to some people is not worth the rush, especially for those who are still unsure if they want to buy.”  

Huttons’ Lee said those who sealed their purchases on Tuesday were either people who had already decided to buy but had not done the documentation, or those who were deciding which projects to buy, and the higher BSD was a nudge for the latter to commit. 

Most of the units sold were priced around S$1.5 million and above, he added. 

According to Huttons, about two-thirds of deals closed on Tuesday were for projects in the CCR, some 14 per cent were RCR sales, and 19 per cent were OCR units.  

Lee said that among the buyers that Huttons agents dealt with, more than 50 per cent were Singaporeans; the others were permanent residents and foreigners. 

ERA’s Mak pointed out that sales of prime properties have gone on the rise. Based on latest statistics, 40 per cent of new units sold in January were located in the CCR, making up the second-largest market share, he said, although the “CCR usually has the smallest market share of sales”.

“A key reason for the higher sales in the CCR (on Tuesday evening) is that there was a good selection of CCR projects open for sale,” he added. Such projects included some that were newly completed and others that were soon to be completed.