Demystifying ABSD: Additional Buyer's Stamp Duty
As of April 27, 2023, ABSD rates differ for various buyer categories:
| Buyer Type | First Property | Second Property | Third Property and Beyond |
|---|---|---|---|
| Singapore Citizens | 0% | 20% | 30% |
| Permanent Residents | 5% | 30% | 35% |
| Foreigners | 60% | N/A | N/A |
| Entities | 65% | N/A | N/A |
The Additional Buyer’s Stamp Duty (ABSD) is calculated based on the property's purchase price or market value, whichever is higher. For example, a Singapore Citizen buying a second property valued at $2.1 million would pay $420,000 at a 20% rate. Similarly, a foreigner purchasing their first residential property valued at $4 million would incur $2.4 million in ABSD at a 60% rate.
Demystifying ABSD: Additional Buyer's Stamp Duty in Singapore
As of January 11, 2025, the Additional Buyer’s Stamp Duty (ABSD) continues to play a crucial role in shaping Singapore's residential property market. Introduced as a cooling measure, ABSD is an additional tax imposed on the purchase of residential properties, primarily targeting Singapore Permanent Residents (PRs), foreigners, and Singapore citizens purchasing more than one property.
What is ABSD?
ABSD is levied on top of the standard Buyer’s Stamp Duty (BSD) and is calculated based on the property's purchase price or market value, whichever is higher. The rates vary significantly depending on the buyer's profile:
- Singapore Citizens:
- 0% for the first residential property
- 20% for the second property
- 30% for the third and subsequent properties
- Permanent Residents:
- 5% for the first property
- 30% for the second property
- 35% for the third and subsequent properties
- Foreigners:
- 60% for any residential property
- Entities:
- 65% for any residential property
These rates were significantly increased in April 2023 to curb speculative buying and prioritize homeownership for Singaporeans, particularly amidst rising property prices.
Impact of ABSD One Year After Introduction
Since its implementation, the ABSD has had a profound effect on the property market:
- Decline in Foreign Purchases: The steep increase in ABSD for foreign buyers from 30% to 60% has led to a drastic reduction in foreign investments in Singapore's residential market. Data shows that foreign transactions plummeted, with their share of non-landed private resale home transactions dropping from 5% to just over 1% by late 2024.
- Shift in Buyer Demographics: With foreign buyers retreating, local buyers, particularly Singaporeans and PRs, have dominated the market. This shift has resulted in a more stable but less diverse buyer pool, which may affect pricing dynamics moving forward.
- Price Stabilization: Despite initial fears of declining prices, many prime properties have maintained their value due to limited supply and continued demand from local buyers. However, overall sales volumes have decreased significantly—by about 27.1% in the second half of 2024 compared to earlier periods.
Looking Ahead to 2025
As we move into 2025, several factors will influence how ABSD continues to affect the market:
- Sustained High Rates: The high ABSD rates are expected to remain in place throughout 2025, continuing to deter foreign investment and potentially stabilizing prices further in high-end segments. Analysts predict that without significant changes to these rates, foreign interest will likely remain low.
- Local Market Adaptation: Developers may shift their focus toward more affordable segments as they adapt to changing buyer demographics. Properties outside prime areas could see increased interest as buyers look for lower entry costs amidst high ABSD liabilities.
- Potential Policy Reevaluation: Given the significant impact of ABSD on market dynamics, there may be discussions around reevaluating these rates or introducing measures to stimulate demand among foreign buyers again. The government's approach will be crucial in maintaining a balanced and sustainable property market.
Conclusion
In summary, the Additional Buyer’s Stamp Duty has fundamentally altered Singapore's residential property landscape since its introduction in April 2023. While it has effectively reduced foreign investment and shifted buyer demographics towards locals, its long-term effects on pricing and market dynamics will continue to unfold throughout 2025. Buyers and investors should remain informed about these developments as they navigate their real estate decisions in this evolving environment.
