26/04/2023
Just some thoughts on the latest cooling measures. If you are feeling lost about what is your next step, let's chat:
Pm Jen at 9848 2410.
• This is a form of wealth tax since the biggest hikes are targeted at foreigners and corporate entities. It is the most significant hike to date, increasing 30% for both categories. For those family offices and foreigners looking to park funds in a safe haven like Singapore, ABSD hike is a deterrent but not be their most significant consideration. However, 30% is a significant jump. So, let's wait & see.
• There are likely to be channelling of interest into commercial/industrial properties since ABSD is not applicable for non residential properties (for now). For investors with liquidity, these can be good investment alternatives. Non residential properties with leasehold above 30 years will be choice picks.
• We were already seeing signs of the residential market moving towards the buyers' market with around 47 new launches and around 35-37 projects which will TOP this year. With this latest measures, the market will cool even further. Those first home seekers who are unaffected by the hikes may well benefit from this.
• For Singaporeans looking to purchase beyond 1st property, the increase is 3% for 2nd property and 5% for 3rd or more properties. For PR, it is a 5% increase for 2nd property onwards.
• My take is, those who can afford to buy, may buy quality assets such as landed or core central districts. They may take advantage of the cooled market sentiments to hunt for a good purchase. They may also take longer to transact given more choices in the market.
• A significant portion of buyers will hold back. Opportunity cost is a key consideration. The decision to wait may cost them more, with new cooling measures, every higher land bid and escalating construction/admin costs. The market conditions coupled with reduced loan tenor (due to escalating age) can make it harder to own multiple properties in time to come.
• Another group of buyers may choose to upgrade into bigger unit sizes instead of buying 2 or more properties. A cooled market sentiment is likely to work in their favour.
• On the flip side, this market timing may not be the best time to downgrade from private to HDB. Beside pricing consideration, you have to fulfil a 15 months waiting period before you can buy HDB. Some buyers may turn to smaller private residential units instead.
P.s. Perhaps this is the time to be thankful for TDSR which ensure that we have a robust system.
Govt to further raise ABSD rates: S’pore citizens buying 2nd home to pay 20%, up from 17%
https://www.straitstimes.com/singapore/govt-to-further-raise-absd-rates-s-pore-citizens-buying-2nd-home-to-pay-20-up-from-17
