In a Thursday evening on 5thJuly 2018, the implementation of the new increased Additional Buyer Stamp Duty (ABSD) was announced. This new policy would soon take its effect on the 6thJuly 2018. Within an hour after the news surfaced, several developers of upcoming new launch condo announced that they would be releasing their units for sale on first-come-first-serve basis on the very same night. And buyers started rushing and forming long queues in the showrooms of within hours.
Apparently, the 5% increase on the ABSD of buyers having existing property and the reduced borrowing limit had caused a buying frenzy for this particular night. Potential homebuyers and investors who had been sitting on the fence wanted to make their purchase before they would end up paying more than they initially planned. This is the result generated by the sudden announcement made by the government. All individuals will have to pay a stamp duty higher with 5% if they already have an existing residential property , while entities, regardless of their kind, will have to manage a stamp duty that is 10% more expensive.
Why did the government adopt such a measure? Apparently, the authorities in Singapore are looking to cool down the property market, which can soon reach a situation when the demand will be much higher than what the market can offer if nothing is done.
Definitely, property buyers wanted to close their deals as soon as possible, considering that the new change will make them dig deeper into their pockets. The stamp duty is part of the fees that have to be managed by a property buyer, the value of the stamp being determined by the price of the property that is about to be purchased and by the number of properties the buyer owns at the moment. Thus, if a Singaporean is looking to purchase a second property, as an example, will have to pay a stamp tax that will be 7 to 12% higher than the initial stamp duty, once the new change will become active. If we are talking about a third property, then the stamp duty becomes even more expensive, the increase in value ranging from 10 to 15%. For foreign property buyers, the stamp duty will be even higher, as its value will suffer increases of 15 to 20%.
An aspect that is worth mentioning is that the citizens or permanent residents of Singapore that are looking to buy their very first property must know that the change will not affect them. In this case, the stamp duty will range from 0 and 5% respectively. But this new change didn’t just stir the plans of property buyers, as property developers also rushed things when it came to making their new developments available. Not wanting to discourage home buyers, the developers of Stirling Residences, Park Colonial and Riverfront Residences brought forward the start of the sales for units in the new condominium. Thus, instead of starting the sales on the 14th of July, as initially planned, the sale season opened on the 5th of July for these new launches, right after the government made its announcement about the new stamp duty changes.
For very many property buyers, especially those looking to buy a second property, the chance meant a real tough decision. They had to decide whether to buy the properties that stirred their interest “today or tomorrow”, as one single day could mean more money out of the pocket, which is “no small change”.