Tag Archives: ABSD

De Souza once again calls for removal of ABSD for Singaporeans

The ABSD is making it difficult for Singaporeans to buy residential property.

The government should consider the gradual and calibrated approach of lifting the Additional Buyer’s Stamp Duty (ABSD) for Singaporeans, as it makes it harder for them to buy a home, said MP Christopher de Souza in Parliament recently, reported The Business Times.

He first put forward this suggestion in January (MP urges removal of ABSD for Singaporeans).

On the other hand, the ABSD for foreigners should remain to deter speculative activity.

Similarly, the authorities should keep the Total Debt Servicing Ratio (TDSR) framework in place for local and overseas buyers, to ensure they only purchase homes that they can afford.

“This should allay any concerns that easing the property cooling measures will cause a surge in Singaporeans purchasing second properties when they may not be able to,” he explained.

Following the introduction of the ABSD in 2011 and the TDSR framework in 2013, construction activity in the private housing and industrial segments have slowed down significantly.

The construction industry’s growth softened from 3.5 percent in 2014 to 2.5 percent last year. In turn, the Ministry of Trade and Industry warned that the construction sector’s lacklustre performance is among the factors that would negatively affect the economy in 2016.

However, Finance Minister Heng Swee Keat said in his recent budget speech that it’s still too early to ease the property cooling measures, based on their assessment of current home prices and prevailing market conditions.

Meanwhile, de Souza urged the government to look at Australia’s approach in bringing down home prices. Under recently enacted policies there, foreigners can only buy new homes and they cannot sell them to other overseas buyers.

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Govt may still relax property curbs this year

Consultants believe the government will tweak the measures if condo prices drop significantly.

Experts still believe the government may ease its property cooling measures later this year or in early 2017, despite the lack of goodies announced for the property sector in Budget 2016, and the higher foreign worker levies in the construction sector, reported Singapore Business Review.

“We expect the government to continue monitoring the residential market, and relaxation is likely only nearer end-2016,” said RHB Research in a report.

The consultancy thinks authorities will likely tweak the property curbs if home prices drop by 12 to 15 percent from its peak.

The government may also review the measures if developers can no longer bear the extension fees that they must pay for failing to dispose residential units within a stipulated period under the Qualifying Certificate (QC) and Additional Buyer’s Stamp Duty (ABSD) rules.

Meanwhile, Maybank Kim Eng reckons the reason why the cooling measures are still in place is because home prices remain too high. It also shows that authorities are satisfied with the low number of non-performing housing loans and high leverage mortgages.

“Further downside should be expected before any lifting is made. This is in line with our view that there is not enough pain in the market yet and cooling measures may only be reviewed in early-2017.”

But if Singapore’s economy takes a turn for the worse and drags down home prices, the government may prioritize lifting the curbs, added Maybank Kim Eng.