Singapore Budget 2023

SINGAPORE, 14 February 2023 – On 14 February 2023, Finance Minister Mr. Lawrence Wong delivered the Singapore’s FY2023 Budget Statement.

Key announcements relating to the real estate sector include:

1) Supporting housing aspirations for young Singaporeans

• First-timer families with children and young married couples aged 40 and below buying their first BTO will have an additional ballot for their BTO flat applications.

• Enhancements to CPF housing grants for eligible first-timer families and singles purchasing resale flats.

2) Increase in Marginal Buyer’s Stamp Duty (BSD) Rates on residential and non-residential properties.

• Residential properties

  1. Value of property in excess of SGD 1.5 million and up to SGD 3 million will be taxed at 5% (up from 4% previously)
  2. Value of property in excess of SGD 3 million will be taxed at 6% (up from 4% previously)

   

• Non-residential properties

  1. Value of property in excess of SGD 1 million and up to SGD 1.5 million will be taxed at 4% (up from 3% previously)
  2. Value of property in excess of SGD 1.5 million will be taxed at 5% (up from 3% previously)

   

Supporting housing aspirations for young Singaporeans

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

The more targeted approach by the government to support specific groups of first-time buyers is considered inclusive at the same time, taking cognizance the situation that these buyers currently face. For first-timer families and couples, the chances of securing a resale flat amid higher prices are enhanced with the additional CPF housing grants which would help narrow the price gap between buyers and sellers.

For first-timer singles having the option of purchasing either a larger HDB resale flat or a smaller private non-landed unit, the additional CPF housing grant extended by the government could channel homebuying demand from some of these single buyers from the private residential market to the HDB resale market.

Increase in BSD for residential properties

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

Higher value residential properties from SGD 1.5 million and above, including land zoned for residential development will be affected by changes in the BSD rate.

A majority of private residential properties are transacted at above SGD 1.5 million. Transaction data shows that those sold at prices in excess of SGD 1.5 million constituted more than half of all private residential properties sold in the last two years. The additional tax imposed would have a bearing on buyers, particularly those in the mass market housing segment where the affordability threshold of buyers, who are generally owner-occupiers, is comparatively lower than those in the mid- and high-end segments.

All land transactions, including land acquisition in the collective sales market will be affected by the increase in BSD rates. The higher acquisition cost will widen the existing price gap expectations between buyers and sellers, which could potentially dampen collective sales deals.

Increase in BSD for non-residential properties

Ms. Tay Huey Ying, Head of Research and Consultancy, Singapore

The increase in BSD for non-residential properties will directly impact the acquisition cost of properties priced above SGD 1 million. We assessed that the impact on the acquisition cost is greater for higher value assets. For example, a purchaser of a SGD 2 million property will pay SGD 15,000 more in BSD from 15 February 2023. In comparison, a purchaser of a SGD 2 billion property will pay close to SGD 40 million more in stamp duty from 15 Feb 2023. Hence, for big ticket deals, the changes in BSD would encourage alternative deal structuring that involves lower acquisition costs.

In terms of property sector, based on caveats lodged as downloaded from the URA’s Real Estate Information System on 14 February 2022, the industrial sector could be more impacted due to the higher volume of transactions priced above SGD 1 million.

Source: JLL Research/REALIS