IS ADDITIONAL BUYER STAMP DUTY STILL RELEVANT IN SINGAPORE? A STUDY ON ITS IMPACTS ON VARIOUS MARKET PLAYERS

Abstract

After 4 years of property slump since 2013 due to various property cooling measures being put in place, the private residential property market started picking up again in early 2017 due to the relaxation of some of these measures. Private residential property outlook was bright amongst buyers, foreign investors as well as developers as the private property price index steadily picked up. Developers were also more active in the collective sales market, snapping up old private residential properties for the purpose of redevelopment.

However, less than 18 months after the property market’s road to recovery, the Singapore government announced increments to the Additional Buyer’s Stamp Duty (ABSD), which affected both buyers and sellers with effect from 6th July 2018. The aim of this policy was to stabilize prices through the curbing of property demand. The immediate sentiment from the market was poor and as such, this study endeavours to examine the impacts of ABSD on the various market players affected as well as its effectiveness on the private residential housing market. To achieve so, the collection of secondary data post ABSD announcement will be obtained. Market players would also be segmented into specific groups in order to evaluate their unique market reaction to the implementation of this policy.

The end result shows that ABSD did effectively dampen demand in the home buyers’ market, however, whether prices will stabilize in the long run is still inconclusive. However, despite being affected by a larger ABSD rate, it was found that ABSD was less effective in curbing demand from foreign investors as they remained resilient to the new policy change. As such, this study recommends the use of alternative policies targeting supply side factors as well as the revision of other property cooling measures such as Total Debt Service Ratio (TDSR) and Seller Stamp Duty (SSD) to better curb speculation and rising prices.