Singapore whacks foreign investors with massive stamp duty hike

Free-market Singapore has levied massive stamp duties on foreign investors and domestic buyers of multiple homes:

Singapore stamp duty reforms

From the Straits Times:

From Thursday (Dec 16), the additional buyer’s stamp duty (ABSD) that must be paid for purchases of residential properties will be raised.

The total debt servicing ratio (TDSR) for borrowers will also be tightened, while Housing Board loans will be lowered from 90 per cent to 85 per cent of a property’s purchase price.

“The private residential measures are calibrated to dampen broad-based demand, especially from those purchasing property for investment rather than owner-occupation,” said the Finance Ministry, National Development Ministry and Monetary Authority of Singapore in a joint statement late last night.

“Measures to tighten financing conditions for both public and private housing will encourage greater financial prudence.”

The ABSD rate will go up from 12 per cent to 17 per cent for citizens buying their second residential property, and from 15 per cent to 25 per cent for those buying their third and subsequent properties.

Permanent residents buying their second residential property will see the ABSD rate rise from 15 per cent to 25 per cent. If they are buying their third and subsequent properties, the rate will increase from 15 per cent to 30 per cent.

Foreigners buying any residential property will pay an ABSD rate of 30 per cent, up from 20 per cent now.

The ABSD rate for entities, including housing developers, will go up from 25 per cent to 35 per cent. Housing developers can have this sum waived if they abide by certain conditions, but will still have to abide by the existing rule under which they must pay an extra 5 per cent of ABSD that cannot be waived.

These measures are being taken because the property market has been buoyant despite the economic impact of Covid-19, the authorities said.

Private housing prices have risen by about 9 per cent since the first quarter of last year, while HDB resale flat prices are also recovering sharply after a six-year decline, rising about 15 per cent in the same time period.

“If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on,” said the authorities. “Borrowers would also be vulnerable to a possible rise in interest rates in the coming years.”

Now that’s how you do housing policy.

Compare Singapore’s approach to Australia, which has refused to implement global anti-money laundering laws, in turn turning Australian property into a magnet for dirty foreign money.

Unconventional Economist

Comments are hidden for Membership Subscribers only.