In the first 9-months of FY2023, property stamp duty collections rose 1.7% to S$4.51billion
The ABSD effects
ABSD rates increased for foreigners in particular, as well for second-time purchasers and developers. This is especially true when compared with rates prior to 2019.
In April 2012, the rate of ABSD for foreigners was doubled from 20 to 60 percent. The ABSD has been raised to 30 per cent and 20 per cent respectively for Singaporeans, second-time purchasers of residential property.
The tax rate has increased to 35 percent from 25 in 2021 for developers subject to ABSD.
BSD is now charged as 6 per cent. This was likely the reason for the increase in stamp duty collected by 9M of FY2023, because most residential transactions were conducted by local residents.
Singaporeans completed 14,019 home purchases in the private sector between April and last December, accounting for 82.1%. Permanent residents accounted 15.5 percent of buyers in 2,647 transactions, while foreigners represented just 2.1 percentage points with only 356 transactions.
The government also increased the supply during that time.
In the period 9M FY2023, the estimated total land value for the Government Land Sales and en block market was S$8.4 billion. This is a 27.1% increase from the same period last year.
Several hot markets in a cooling market
In 2023 the number of new sales as well as resale deals will decrease year-on year. However, the price index for private residences is set to increase by 6.8 %.
This would have caused a drop in the amount of stamp duties collected as the price hike could not counteract the fall in the number secondary market transactions in which stamp duties are payable.
Data from the Urban Redevelopment Authority revealed that 6,452 brand new private homes would be sold by 2023. It is the lowest figure since 2008 (when 4,264 home were sold). The volume of resale units in condominiums is estimated to have been 10,166 last year. This was around 15% lower than the estimated volume, 11,949, for 2022.
However, since (stamp tax revenue) rose, the variance could come from sales of commercial shophouses or conservation shophouses where values rose sharply between 2023 and 2024.
According to reports, funds from illegal gains were often parked at conservation shophouses. several shops owned by entities tied to suspects implicated in the S$3Billion money-laundering case were listed for sale on DBS’s behalf last month.
While new home sales dipped 9 per cent, sub-sales jumped 59 per cent. Sub-sales can be defined as secondary sales before a building project’s completion.
Higher Property Tax Bills
Revenue from property tax rose 12.6% from S$3.02bn in 9M FY2023, and is expected grow even more in FY2024.
Revenue from Residential Property Tax is projected to grow around S$600 Million By 2024. That’s nearly 60% more revenue than the government had initially estimated. It was attributed to higher AVs which rose alongside rents in private and public accommodation.
Due to the increase of market rentals between 2022 and 2023, the AVs in most owner-occupied home grew by at least 20 per cent by 2024.
The 9M FY2023 figure is based off of 2022’s AVs. The AVs should have grown between 20 and 30 percent due to the rise in private home rental rates that year. The 2023 property tax rates have also been raised.
As a result of the increased number condominiums built in 2010, more homeowners may now be paying property tax.
Some analysts are predicting a small rise in stamp tax and a large increase in property tax for the whole year.
The government previously projected stamp duty collection of S$5.75 Billion in FY2023. Singapore is also expecting stamp duty to represent 0.8 percent of the gross domestic products, up from 0.9 percent in FY2022 versus 0.8 percent in FY2019.
Property tax revenue in FY2023, projected at S$5.55billion, is 9.6 percent higher than FY2022’s S$5.06billion.
Next year, at this time of the year when 2024’s numbers are published, it would be interesting… to see how much the tax on property has risen.
This is because the AVs in private residential properties has improved significantly.
Stamp duty would drop from 5-10% in 2024. The total amount of stamp duties and property taxes combined would still result to an increase.
Property stamp duty collections in the nine months of this year’s fiscal year have increased by 1.7% from last year, to S$4.51bn.
The marginally higher revenue in an year with a lower transaction volume, and higher duties rates, is a turnaround from the previous nine month period when stamp tax revenue dropped by 15,7%.
After 2022 both tax rates, and the annual value of property (AV), were raised, the total amount of property tax collected grew by 12.6% to S$3.4 billion. The AVs have risen based on the property rental value. This reflects a 30% increase in private residential rents and in public rentals for 2022.
Stamp duty revenue during the first three-quarters of FY2023, from April through December 2023, increased from S$4.43 billion to S$4.51billion. The final tally for FY2023 is expected be slightly higher than that of FY2022, in which the total stood at S$5.95 million.
The S$5.26bn in 9M FY2021 was collected 14.3% more than the S$9.3bn in 9M for FY2023. Based on the data of the Singapore Department of Statistics (SDS), it is 39.7 percent greater than the S$3.23 million netted in the 9M of FY2019.
