Singapore Budget 2025: No Property Cooling Measures or Wealth Tax

Recently, whether Singapore's property market will face further cooling measures has become a subject of intense discussion. Economists forecast that the Government will not introduce fresh property cooling measures or wealth taxes in Budget 2025, leaning instead towards letting market demand and supply dynamics rein in rising property prices.

Government Favours Market-Driven Adjustments

In their latest "SG60 Election Year Budget" analysis report, analysts noted that they do not expect the Government to introduce new property cooling measures or wealth taxes in Budget 2025. The Government is likely to prioritise monitoring whether the ramped-up housing supply over the coming years can effectively alleviate market demand to achieve a cooling effect.

Minister for National Development Desmond Lee previously mentioned in media interviews that the Government is "not averse" to taking further cooling measures if necessary, but will currently give existing demand-side and supply-side measures more time to take effect before deciding on any further intervention.

Existing Measures Expected to Remain in Place

Analysts believe the Government will maintain existing measures to keep market overheating in check. These include the 15-month wait-out period for private property owners looking to buy non-subsidised resale HDB flats, as well as the cooling measures implemented in April 2023, such as higher Additional Buyer's Stamp Duty (ABSD) rates for foreigners and locals purchasing residential properties.

Furthermore, the Government could potentially ease select criteria to support the collective sale (en bloc) market, rejuvenate older estates, and adjust the supply of private homes in tandem with shifting market demand.

Government Allocates Funding to Enhance Private Estates

Following the report's release, the Government announced on 8 February the expansion of the Estate Upgrading Programme (EUP), allocating S$135 million to upgrade the living environment across 32 private estates, with a particular focus on improving amenities and accessibility for seniors. This initiative is expected to benefit over 20,300 households.

Wealth Taxes Unlikely to See Further Hikes

Regarding wealth taxes, Singapore has already raised them significantly in Budgets 2022 and 2023. Given the prevailing uncertainties in the global economic landscape, overly aggressive tax measures could dampen market sentiment.

Previous tax adjustments included:

Raising the top marginal personal income tax rate from 22% to 24% from Year of Assessment (YA) 2024.

Increasing property tax rates and introducing higher stamp duty tiers for higher-value properties.

Hiking the Additional Registration Fee (ARF) tiers for luxury vehicles.

Current Property Market Landscape

Discussions regarding potential cooling measures were triggered by a year-end spike in new private home sales and an uptick in million-dollar resale HDB flat transactions.

Data showed that in 2023, over 1,000 resale HDB units transacted for over S$1 million, accounting for 4% of total transactions—more than double the figure in 2022. Overall HDB resale prices climbed by 9.6%, nearly twice the growth recorded in 2022.

In contrast, private home price growth moderated to 3.9% in 2023, down from 6.8% in 2022, largely aligning with median income growth of 3.5%.

Potential Tax Rebates for Commercial and Industrial Properties

To help ease cost pressures on businesses grappling with rising commercial rents, economists forecast that the Government may consider property tax rebates for commercial and industrial properties in this year's Budget, encouraging landlords to pass cost savings on to tenants.

Last November, the Government announced a one-off 15% to 20% property tax rebate for all owner-occupied residential properties. Currently, commercial and industrial properties are taxed at a flat rate of 10% of their Annual Value (AV).

Fiscal Surplus and Budget Forecasts

With this year marking Singapore's 60th year of nation-building (SG60) and the final year of the current Government's term, Budget 2025 has drawn substantial attention.

The Government is anticipated to tap into a substantial portion of its accumulated surplus over the five-year term, estimated at around S$6.7 billion, with Budget 2025 projected to run a fiscal deficit of S$6 billion, or 0.8% of Gross Domestic Product (GDP).

Analysts estimate total operating revenue for FY2024 to reach S$114 billion, higher than the S$108.6 billion projected in last year's Budget.

Meanwhile, more conservative analysts estimate the fiscal surplus between FY2021 and FY2024 at around S$6.6 billion, suggesting the Government has sufficient fiscal headroom to deliver a relatively generous Budget, with a projected deficit of roughly S$3.8 billion, or 0.5% of GDP.

Conclusion

Overall, the Government is unlikely to roll out new property cooling measures or raise wealth taxes in Budget 2025, relying instead on supply-demand rebalancing to moderate home price growth. Concurrently, targeted measures could be introduced to support the commercial and industrial real estate sectors and alleviate business costs. Supported by healthy surpluses, Budget 2025 is also expected to channel more public spending towards supporting wider economic and developmental needs.