Singapore buildings

SINGAPORE: With Budget 2024 slated for March 16, 2024, PropertyGuru experts share property-related recommendations to help Singaporean home seekers and owners.

Dr Tan Tee Khoon, PropertyGuru Singapore’s Country Manager, and Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions at PropertyGuru Group, have offered their insights to tackle property challenges.

Reducing the 15-month wait for downgrading from private to public housing

In September 2022, the government stretched the wait-out time from 6 months to 15 months for private residential property owners and ex-owners before they could buy non-subsidised resale flats.

Private property owners with special circumstances could seek HDB’s help, with about 25% of 3,470 appeals between Sept 30, 2022, and Dec 31, 2023.

This policy helped ease demand and price growth for HDB flats, but it’s time for a reassessment. Dr Tan Tee Khoon states, “the market is at a new stage, so we should revisit some of the assumptions.”

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Signs of moderation in the HDB resale market are apparent, and government BTO supply is gradually easing pent-up demand. However, prudence is needed in transitioning to HDB flats with rising geopolitical tensions.

Demand, Sale Price and Supply Index for HDB resale flats
Photo: DataSense by PG4B

Despite restrictions, a notable demand for high-value flats is typically sought by upgraders.

Number of units transacted equal to or more than one million dollars
Photo: HDB, 19 Jan 2024

Dr Tan cautions against removing barriers to HDB ownership, which could spike prices. Instead, he suggested measures like extending the minimum occupation period or imposing a pro-rated capital gains tax to prevent market instability, strategies previously employed to maintain market balance.

Allowing Singaporean families to purchase second properties for rental purposes

Dr Tan suggests allowing Singaporean families to purchase a second property for rent without the need for decoupling, with the Additional Buyer’s Stamp Duty (ABSD) withheld.

With a decline in demand for non-landed properties, there’s a growing focus on owner-occupied properties. However, Dr Tan highlights the financial strain caused by decoupling for couples, leading to increased stress and limited risk diversification.

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Sale Price, Sale Demand and Sale Supply Indices for Private Non-Landed Homes
Photo: DataSense by PG4B

Additionally, enabling couples to purchase homes may flood the rental market, potentially causing volatile rental prices in the future.

Dr Tan proposes withholding ABSD for second homes to maintain a balanced property market, with interest payable if a third property is purchased.

However, this rule may not apply if the property is held for over ten years to avoid discouraging redevelopment.

He also suggests imposing a capital gains tax for property disposals within 5-10 years to deter speculative behaviour.

Reintroduction of Estate Duty or Inheritance Tax

Dr Lee Nai Jia, PropertyGuru Group’s Head of Real Estate Intelligence, suggests the reintroduction of Estate Duty or Inheritance Tax, citing the escalating government expenditure due to an ageing population and climate change concerns highlighted in Budget 2023.

In 2008, Singapore scrapped estate duty to attract wealthy individuals, fostering growth in private banking and asset management. However, recent years have seen a global shift, with wealth polarisation threatening social cohesion.

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Despite concerns regarding potential asset relocation, Dr Lee proposes tailored provisions, like reduced rates for environmentally sustainable investments and funding for societal support initiatives.

While inheritance tax may push individuals towards other financial hubs, Dr Lee stresses the need for broad estate duties applicable across society, ensuring a fair tax burden distribution based on property value and type.

This is to strike a balance between addressing wealth inequality and maintaining Singapore’s financial competitiveness on the global stage. /TISG

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