IMPACT OF STAMP DUTIES AS COOLING MEASURES IN SINGAPORE'S PRIVATE RESIDENTIAL MARKETS

Abstract

When the Singapore private residential property market recovered from the global economic crisis in 2009, prices immediately shot up, prompting the authorities to intervene to curb speculation and to prevent prices from running out of fundamentals. This led to a total of eight rounds of cooling measures to date. Commonly used measures in such situations included the introduction or enhancement of transaction taxes called stamp duties, which would be a direct increase in transaction cost for the affected parties. The objective of the study is thus to examine the price impacts of these stamp duties using regression analysis in an event study. It involves the use of two methods, namely the hedonic pricing method and the repeat sales method. Also, difference-in- differences analyses are also employed to study relative price impacts to compare amongst different subgroups of transactions. This includes comparing between the primary market and the secondary market, and between HDB upgraders and speculators/investors. Results from the study conclude that most cooling measures that involved the introduction or enhancement of stamp duties were ineffective in curbing escalating prices and instead, may end up being counter-productive. In addition, it is found that the Seller’s Stamp Duty (SSD) and Additional Buyer’s Stamp Duty (ABSD) had greater impact on the non-landed market compared to the landed market. Furthermore, it is probable that HDB upgraders, a group of genuine buyers of private residential properties, are affected by the implemented stamp duties although they are not the intended targets.