After a strong mandate given by Singaporeans to the ruling party PAP government, Singapore Real Estate Exchange (SRX) urged the government to remove Additional Stamp Buyer Duties (ABSD) taxes to grow property prices.
SRX claimed that the current property prices have become affordable thanks to the Housing Development Board’s efforts to increase the number of Build-to-Order (BTO) flats, and that Singaporeans’ wages and economic growth have outgrown property price indexes.
“Since prices are under control and home ownership is accessible to all generations of Singaporeans, it is an opportune time to remove ABSD for the good of the overall economy.”
SRX said ABSD can be “safely” removed due to 3 government credit control measures, with the first being standardised underwriting constraints that include tightening loan-to-value limits, reducing loan tenures, lowering mortgage service ratio to 30% and introducing a Total Debt Servicing Ratio (TDSR) of 60%. Secondly, the SRX claimed that Singapore has a flexible speculation control with Sellers’ Stamp Duty (SSD). Thirdly, SRX said that properties pricings and data today are more transparent.
The removal of ABSD will cause private property prices to spiral out of control again as Singapore has seen in between 2010 and 2012. Increase in private property prices will also increase HDB pricing as high income individuals, who are mainly Permanent Residents and new citizens, turn their attention on HDB units.
Industry watchers are expecting the PAP government to increase property prices now that the election is over.