Property Sector Urges Government to Review ABSD to Help More Singaporeans Realise Private Home Ownership

Several rounds of property cooling measures implemented by the government have shown noticeable results over the past few years, moderating local private residential property prices and overall sales volume. Consequently, the real estate sector has urged the government to consider easing certain homebuying restrictions, particularly the Additional Buyer's Stamp Duty (ABSD), in the upcoming Budget next month.

As non-landed private properties purchased by foreign buyers—especially luxury homes in the Core Central Region (CCR)—are generally not the target market for ordinary Singaporeans, it was suggested that the government lower the ABSD on homes in this region valued at $5 million or more from 60% to 30%.

There is room for the government to adjust the ABSD and certain housing policies to minimise market distortions while ensuring genuine homebuyers are not adversely affected.

The four rounds of cooling measures rolled out since 2021 have borne fruit, with overall private home prices rising by 3.9% in 2024—significantly lower than the 6.8% and 8.6% seen in the previous two years. Compared with the double-digit growth of 10.6% in 2021, price appreciation has evidently been kept in check.

Excluding Executive Condominiums (ECs), new private home sales have also plummeted from over 13,000 units in 2021 to around 6,500 units last year.

Across market segments, the CCR private residential market was hardest hit by the property cooling measures introduced in 2023. In 2024, transaction volumes in the CCR—which represents the luxury segment—dropped by about 20% to just 2,622 units. Experts have urged the government to focus on mitigating the disproportionate impact of the ABSD on the CCR market in the upcoming Budget.

Experts also suggested granting an ABSD waiver to buyers who do not intend to hold two properties concurrently.

Currently, Singapore Citizens purchasing a second residential property must pay a 20% ABSD. To avoid paying this hefty sum, many HDB upgraders are forced to sell their flat first.

For instance, if an HDB upgrader buys a $2 million private home and wishes to buy before selling their flat, they would have to cough up $400,000 in upfront ABSD. This is impractical, and many Singaporeans feel it stifles their upgrading aspirations.

The government could consider granting upfront ABSD remission to HDB upgraders purchasing private homes, provided they commit to selling their flats within six months of moving into their new property.

On the other hand, given the escalating prices of ECs, the current 30% Mortgage Servicing Ratio (MSR) cap should be raised to 40% to keep pace with pricier ECs.

According to the report, home price increases have outpaced household income growth in recent years. The average home price-to-income ratio (PIR) stood at 13.4 times between 2000 and 2023, but climbed to 14.6 times last year, "pushing the ratio to the upper limits of historical affordability bands".

The report noted that this suggests further home price growth could be constrained unless incomes rise at a faster pace. Buyers may have to fork out larger downpayments or compromise on unit sizes to keep housing affordable.

Average per square foot (psf) prices for new private homes have reached elevated levels, hitting $3,090 psf in the CCR and $2,680 psf in the Rest of Central Region (RCR), while the Outside Central Region (OCR) has reached $2,290 psf.

To keep private home quantum prices below $2 million, developers will likely have to further shrink new launch unit sizes.