Singapore’s 2022 Budget was announced in February by Singapore’s Finance Minister Lawrence Wong. The Budget announcements covered a suite of measures, and in this article, our Business & Family Solutions team at Lighthouse Canton takes a closer look at the country’s property market and the measures that the government has recently announced to take effect.
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Despite the spread of COVID-19 over the past 2 years, statistics show that the demand for residential property in Singapore continued to rise. This phenomenon has existed not just in Singapore but has been experienced the world over where several nations such as Australia and United States have seen a property market boom.
While it is good to have a boom in the property market for each such economy, the flip side of it is that a lot of people get priced out of the market.
In Singapore, just like any other country, one of the main objectives of any government is to ensure that the Singaporean locals can purchase a residential property for themselves. The government has gone above and beyond to provide this basic need.
However, in the past 2 years private housing prices have risen by 9% as stated in the Press Release per the Singapore regulatory authorities, which can cause strain on first time local home buyers. The press release also noted that enabled by the low interest rates, transaction volumes in the property market have remained high.
It was with this aim in mind that the government deemed it necessary to introduce cooling measures that would bring down property prices so that the locals don’t get priced out.
New property cooling measures announced
As a background, buyer’s stamp duty is the first levy on the purchase of property and payable on purchase or acquisition of property in Singapore. It is computed on the purchase price or market value of the property, whichever is higher.
The cooling measure is that of additional buyer’s stamp duty (“ABSD”), which is an additional levy on the purchase of residential property. It is computed based on the purchaser’s citizenship, residency status and the number of Singapore residential properties already owned by the purchaser.
It was first introduced in December 2011 to ensure property remains affordable for Singaporeans. Since 2011, ABSD has been raised twice, once in 2013 and then in 2018 for the same reasons, to moderate the rising demand for residential properties in Singapore. 
Effective 16 December 2021, ABSD was raised further. This would mean that a foreigner now has to pay 30% stamp duty to buy a property in Singapore. A full summary is as follows:
Effect on Singapore’s property market
Since the new ABSD rates came into effect late last year, there has been a 15% drop in the take-up of private residential properties. Though in itself these statistics are not an accurate indicator of the effect of the ABSD measures as they were introduced in late December, there have also been reports by local real estate agencies of a severe drop in inquiries from foreign buyers. Private home sales have slumped to an all-time low in February 2022, falling to 18.3% lower compared to February 2021 and even lower than the volume of transactions during circuit breaker period in 2020.
Nevertheless, Knight Frank Singapore and JLL Singapore still expect private residential property prices to rise between 1% to 4% in 2022.
It is an apt opportunity to note that there are no restrictions on the purchase of landed property in Sentosa Cove by foreigners. Since its launch, Sentosa Cove has been a great attraction for foreign investors or visitors wanting to buy landed property as a home in Singapore. COVID-19 has also increased the recent falling demand for Sentosa Cove properties with the transaction volume being up 84% in 2021.
Budget 2022 measures on property tax rates
On 18 February 2022 with the announcement of Budget 2022, property tax rates are also set to increase marginally from 2023. Owner occupied residential properties will be taxed between 6 to 32% for the annual value above S$30,000 and non-owner occupied residential properties will be taxed between 12 to 36%, almost doubling from the current tax rates for higher-end properties.
In the current environment, with respect to succession planning, buying property in trust for your child may continue to be an attractive option. Read more in our previous article: “Can you buy Singapore residential property in your child’s name? An analysis”. The measures for satisfying IRAS’s conditions in such an arrangement continue to be stringent. It must be highlighted again that the property is required to be purchased fully in cash and restricts the pool of individuals able to avail this option.