What is ABSD?
Additional Buyer Stamp Duty (ABSD) was 1st introduced by the Inland Revenue Authority of Singapore (IRAS) on 8 Dec 2011. Afterwhich, they did a revision on 12 Jan 2013 and another one on 5th Jul 2018. The table below shows the changes and revision since the 1st ABSD was introduced.
ABSD – Additional Buyer Stamp Duty Rates on the higher of the purchase price or market value
Overview of Additional Buyer Stamp Duty
When it was 1st introduced, the motivation was to curb the rapid price increase in the property market. Besides that, it is also to slow down the rapid price increase. Government wanted to have steady growth in property price.
Over the years, prices still increase at a faster then expected rate. And because of that, on 11 Jan 2013, IRAS increased the ABSD rates. And also introduced Seller’s Stamp Duty on industrial properties for the first time. The reason for that is to discourage speculative activity in the industrial market.
Fast forward to 2018, the property market continues to increase again after slowing down from the last ABSD adjustments. And because of that, IRAS increased the ABSD rates the 2nd time on 5th July to effect from 6th July. Besides that, IRAS also introduce the tightening of loan-to-value (LTV) limits on residential property purchases. This is an effort to “cool” the property market and keep price increases in line with economic fundamentals.
How does it affects you?
With the ABSD in place, buyers of multiple properties started to feel the pinch for the need to fork out the extra monies. This will also mean that transactions started to slow down and becasue of that, the price increased slow down as well. Which is in line with what the government wanted.
However, as we see the growth of properties prices in Singapore over the years, we can agree that property investment is still a safe haven if you can hold the property.
Which also means that, investors now have to adjust their mind set on property investment from ‘Speculative Buying to Long Term Investment’.
Which I personally feel that this will stablise the property prices and still achieve a steady growth in future.
Will ABSD be removed?
This is the question that many buyers will ask, myself inclusive!
Looking at the trend and how IRAS had increased the ABSD overtime. Besides that, we also saw how releaxing rules push the property prices up, I personally don’t forsee the relaxation in ABSD. Unless something major happens, else it should be there to stay.