First 9 months of FY2023: Property Stamp Duty Collections Up 1.7% at S$4.51Bn

Certain hot segments in a cooler market

In 2023 new sales and resales transactions will be down year on year while the private housing price index is expected to rise by 6.8 percent.

The increase in prices could not have offset the decrease in secondary-market transactions for which stamp duty is due.

The Urban Redevelopment Authority’s data shows that about 6,452 newly built private homes have been sold in the year 2023. That is the lowest since 2008, when only 4,264 new houses were sold. In 2018, the volume of resale condos was estimated to be 10,166, around 15 percent lower than that estimated for 2022.

As (stamp-duty revenue) increased, it is possible that the variance in the 2023 results from the sale or conservation of shophouses and commercial properties, whose value rose dramatically.

Illicit gains were stored in conservation shops, according to new information. Some shophouses belonging to entities associated with suspects involved in the S$3billion money laundering investigation were put on the market in a bid to recover proceeds.

While new home sales dipped 9 per cent, sub-sales jumped 59 per cent. Sub-sales are sales that take place before the project is complete.

The government collected S$4.51 billion in stamp duty during the first nine month of the current fiscal period, up 1.7 per cent on the previous year.

The revenue increase was due to a combination of lower transaction volumes, higher duty rates and a different nine-month time period. In the prior nine-months period, stamp duty revenue had fallen by 15,7%.

After both tax rates as well as property annual values were raised in 2022. In 2022, the AVs for residential properties have risen by 30%, reflecting both a rise in rental prices and a hike in tax rates.

Stamp duty revenue increased by S$4.51 billion in the first 3 quarters of FY2023, from April to December. The amount is expected close FY2023 a little higher than FY2022, at S$5.95 billion.

The S$5,26 bn collected by 9M in FY2021 is 14.3 % lower than what has been collected so far for FY2023. 39.7 percent more than the S$3.23billion collected in 9M of FY2019.

The ABSD effect

ABSD rates are up for both foreigners and second time buyers as well as developers, despite the overall decline in transaction volume.

In April, last year the ABSD was doubled for foreigners to 60%. The ABSD rates were also raised for Singaporeans and permanent residents.

From 25 percent, is now 35 percent for developers that have to pay ABSD on land purchased.

BSD was charged at 6 % in 9M FY2023, and this likely contributed to the high stamp duty collections, as local home owners accounted for most of the residential transactions.

Singaporeans spent 82.1% on private home purchases between April last year and December. Permanent residents were responsible for 15.5% with 2,647 sales, while foreigners only accounted 2.1 % with 356 purchases.

As the government increased their supply, they also sold more parcels of land.

In the 9M of FY2023, the estimated value of the land sold under the Government Land Sales Program and on the enbloc market was S$8.4bn, a 27.1 per cent increase over the year before.

High property tax bills

Property tax revenue grew 12.6% in the 9M of FY2023, to S$3.4billion, from S$3.02billion a year ago.

mattar residences floor plan

revenue derived from residential property tax should grow by S$600m in the year 2024. This is nearly 60% higher than government’s original estimation of S$380m. According to this, the increase in AVs coincided with increases in rents of both private and government housing.

As an example, the AVs (average rental values) of many owner-occupied properties will grow by more than 20% in 2024 as a result of the increase in market rental from 2022 to 2020.

The FY2023 figures were based on AVs for 2022, which should’ve grown by 20 to 30% due to private rents that rose close to 30%. In 2023 the property tax rates also went up.

There were more condominiums completed in 2012, which may have caused homeowners to start paying property taxes.

Some analysts anticipate a slight rise in stamp duty and a more significant jump in the property tax collection for the entire year.

The government had projected that stamp duty would be collected at S$5.75billion for FY2023. Singapore’s stamp duty will also account for 0.8% of its gross domestic product in FY2023, compared to 0.9% in FY2022 and 0.8% in FY2019.

Property tax revenues were projected at S$5.55Billion in FY2023, which is a 9.6 percent increase over FY2022’s S$5.06Billion.

I’m curious to know how property taxes will have increased by the time 2024 is published.

This is due to a significant improvement in the AVs (Audio Visuals) of residential properties.

Stamp duties will drop by approximately 5-10%. Total, combined, these taxes would still increase.

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