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The Impact of the ABSD rate hike and property buyer tax on real estate investments

By Jin Lee

The Additional Buyer’s Stamp Duty (ABSD) is a property buyer tax in Singapore that was introduced in 2011. It is a tax that is imposed on top of the existing Buyer’s Stamp Duty (BSD) and is meant to deter foreigners and property investors from driving up the property market prices. Recently, the ABSD rates have been increased to cool down the property market. This article discusses the impact of the ABSD and property buyer tax on real estate investments in Singapore.

The ABSD and Property Buyer Tax Explained

The ABSD is a tax that is levied on top of the BSD, which is already imposed on property buyers in Singapore. The ABSD was first introduced in 2011 to curb the influx of foreign property investors, who were driving up property prices in Singapore. The tax was initially set at 10% for foreign buyers and 3% for Singapore Permanent Residents (PRs). Singapore citizens were exempt from paying the ABSD.

As of 14 Feb 2023, the ABSD rates were revised and increased. 

Before 14 Feb 2023, the ABSD for residential and non-residential property for Singaporeans was capped at 4% after the first $1M of the purchase price. However, the purchase price is now capped at 6% for purchase prices greater than $3M.

Impact on real estate investments

The ABSD and property buyer tax have had a significant impact on real estate investments in Singapore. The increased rates have made it much more expensive for foreign buyers and investors to purchase properties in Singapore. This has resulted in a decrease in demand for properties, which has in turn led to a drop in property prices.

The ABSD has also had an impact on local Singaporean buyers. The higher rates have made it more difficult for Singaporeans to purchase multiple properties, which was a common investment strategy in the past. This has led to a shift in investment patterns, with many investors now turning to overseas markets.

Government policy and future outlook

The Singapore government has implemented the ABSD and property buyer tax as part of its efforts to cool down the property market and prevent a property bubble. The measures have been successful in achieving their goals, as evidenced by the decrease in property prices and demand.

The government has also introduced other policies to further control the property market, such as the Total Debt Servicing Ratio (TDSR) framework, which limits the amount of debt a borrower can take on. These policies have made it more difficult for property buyers and investors to enter the market, but they have also ensured that the market remains stable and sustainable in the long run.

Moving forward, it is likely that the government will continue to implement policies that ensure the stability and sustainability of the property market in Singapore. Investors and buyers should be aware of these policies and take them into account when making investment decisions.

The ABSD and property buyer tax have had a significant impact on real estate investments in Singapore. While they have made it more difficult for investors and buyers to enter the market, they have also ensured that the market remains stable and sustainable in the long run. The government will likely continue to implement policies that ensure the stability and sustainability of the property market in Singapore, and buyers and investors should take these policies into account when making investment decisions.

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