Singapore Budget 2024

SINGAPORE, 16 February 2024 – On 16 February 2024, Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, delivered the Singapore’s FY2024 Budget Statement. 

Key announcements relating to the real estate sector include:

1. Introduction of a Parenthood Provisional Housing Scheme (Open Market) Voucher for one year to support eligible families who rent a HDB flat in the open market.

2. Adjustments to the Annual Value (AV) bands for owner-occupied residential property tax rates from 1 January 2025.

Table 1: New Annual Value bands for owner-occupied residential properties

Source: MOF, MND, The Business Times

Retirees living in higher-end residential homes, who face cash flow issues when paying their Property Tax bills, can apply for a 24-month instalment plan without any interest from the Inland Revenue Authority of Singapore. 

3. Revisions to the Additional Buyer’s Stamp Duty (ABSD) to support seniors and the built environment sector:

a. New ABSD concession to single Singapore Citizens (SC) aged 55 years and above for purchases on or after 16 February 2024. Single SC seniors will be able to claim a refund of ABSD paid on their lower-value replacement private residential property, if they sell their first residential property within 6 months after the: 

i. Date of purchase of a replacement residential property, if it is a completed unit; or

ii. Issue date of the TOP or CSC of the replacement residential property, whichever is earlier, if the replacement unit is not completed at the time of purchase. 

b. Lower the ABSD remission clawback rates for housing developers (HDs) should they sell at least 90% of housing units in the development within 5 years from the land acquisition date, if the commencement and completion of housing development timelines are also satisfied. 

Table 2: Revised ABSD remission clawback rates for projects

Source: MOF, MND

Ms Chia Siew Chuin, Head of Residential Research, Research & Consultancy, Singapore

谢岫君, 私宅市场研究部主管 (新加坡) commented:

Changes to Additional Buyer’s Stamp Duty

Revised ABSD remission clawback rates for housing developers (HDs)

While the revision in the ABSD remission clawback is seen as a positive move by the government, the measured scale of revision is not expected to have a significant impact on HDs’ land acquisition strategies.

This is considering the multitude of challenges faced by HDs. These encompass escalating development costs and risks, reduced saleable floor area, a sluggish economic climate, and softer homes sales demand due to market cooling measures, increased interest rates, and inflation.

The ability of HDs to offload units from their projects hinges on numerous factors, many of have changed since they initially acquired their sites. These include the macroeconomic landscape and policy factors that influence their ability to effectively market and sell units.

As such, HDs will remain guarded, selective, and strategic in their land acquisition activities, focusing their efforts on sites that offer more compelling or attractive prospects. This is particularly the case for the acquisition of large sites and land-banking in the private market.

The private collective sales market continues to present challenges due to differing price expectations between developers and sellers. Developers will approach with caution due to heightened costs and risks, while sellers are hesitant to lower asking prices in view of higher home replacement costs. This stalemate is expected to persist unless both parties are willing to negotiate to reach an agreement.

New ABSD concession for single Singapore Citizen (SC) seniors purchasing a replacement private residential property

The introduction of the new concession for single senior citizens (SC) is widely regarded as an inclusive measure that acknowledges their specific housing requirements.

This group of buyers, particularly those seeking to downsize, will embrace this development as it significantly reduces their financial burden. The concession will provide much-needed relief and support to single SC seniors in their pursuit of more suitable housing options.

Adjustments to the Annual Value (AV) bands for owner-occupied residential property

The change to expand the AV bands is a positive step towards preventing owner-occupiers from being burdened with higher property tax rates due to significant rent increases since 2022.

The revision results in an increase of up to 50% in the highest AV band. Considering the rental index of private residential homes, there has been a cumulative rise of approximately 41% in 2022 and 2033. This context highlights the significance of the revision in addressing the impact of escalating rents on property tax rates for owner-occupiers.