The Real Estate Developers’ Association of Singapore (REDAS) has asked the Singaporean government for a reprieve on the Additional Buyer’s Stamp Duty (ABSD) rates.
The president of REDAS Chia Ngiang Hong said this at a Chinese New Year event where Finance Minister Heng Swee Keat was present as the guest of honour.
Singaporean government took various property cooling measures in July 2018 whereby property developers have had to pay 30 per cent ABSD on acquired land, up from 15 per cent previously. Out of the 30 per cent, 5 per cent is non-remittable.
In addition to this, the time frame to deliver and sell the developed property was capped at five years.
“The surprise cooling measures rattled the Singapore financial market and property stocks were severely punished. With a subdued outlook for the market and a 15 (percentage point) hike in ABSD to 30 per cent for land acquisition, developers' appetite for land in Singapore is likely to be severely curtailed as evidenced by recent en bloc tenders where many closed without any bids,” said Chia.
“This policy has pushed all developers to exhaust their inventory at around the same time and could partly account for the land price escalation in 2017 and 2018 because everyone basically ran out of inventory at the same time,” he added.
Chia also advocated for discouragement of excessive land-banking.
Urging for the review of the ABSD rates, he said, “If the ABSD is not reviewed, we can expect a repeat of the 2017 to 2018 land grab situation in four to five years’ time. When the price of the raw material goes up, we can expect the price of the end product to increase as well.”
REDAS has also urged the Singapore government to review the loan-to-value limits for first-time property buyers. These refer to loans where buyers borrow against the value of their properties.
Notably, loan-to-value limits were tightened by 5 percentage points at the same time as the higher ABSD rates were announced in July.
“I strongly believe that it is the intention of the Government to assist to fulfill the aspirations of many young Singaporeans to own a private home. Hence, it may be timely to review and tweak some existing policies and measures to help Singaporeans, particularly first-timers, to achieve their objective,” said Chia.