IMPACT OF FOREIGNERS ABSD ON HOUSING PRICES: EVIDENCE FROM SINGAPORE

Abstract

The cooling measures are pre-emptive measures set by the Singapore Government aimed to dampen the housing demand, curb overheated housing markets and ensure that the property price grows at a sustainable and relatively stable rate. ABSD is a type of demand-side cooling measure used to curb speculative purchases by imposing taxes on potential gains from purchasing multiple properties. Thus, reducing the incentives to purchase additional properties for investment purposes in the short term period. It also curbs speculation from foreigners in the local private property market, as they are required to pay higher ABSD. This final year dissertation aims to explore the Foreigners Additional Buyer Stamp Duty (ABSD), effective from 27 Apr 2023, as an exogenous event to empirically test its moderating effect on the Singapore private residential housing market. By Applying a "differences-in-differences" model to both landed and non-landed private housing, as well as Housing and Development Board (HDB) resale flat transaction data, covering the 14-month period from July 2022 to February 2024, I found that the insignificant cooling effect on the private housing market after 7 months (the treatment period) of the Foreigners ABSD has increased to 60%. The results indicate that average housing prices increased by 2.5% in the period following the implementation of the new Foreigners ABSD policy.