65% of Singaporeans Hopeful for Lower ABSD, MAS Says There's No Need

absd mas covid
 

Whether formally debated about in parliament, or just casual kopitiam talk, housing affordability is a common conversation topic in Singapore. This is especially so in current times, as the pandemic recession caused by COVID-19 sure didn’t do the property market any favours whatsoever. 

Although the economic slump has resulted in more Singaporeans fretting over their property purchases, Singapore’s central bank, the Monetary Authority of Singapore (MAS) has said that the existing property cooling measures will remain. What does this mean for home buyers looking for a new home during this period? 

 

Study shows Singaporeans’ concerns over housing affordability following COVID-19

In our biannual Consumer Sentiment Study for H2 2020 which studied Singaporeans’ feelings and attitudes towards the real estate climate in the previous half (i.e. during the peak of the COVID-19 outbreak) many Singaporeans reported being more price-sensitive now (42%) and ranked housing prices as the top barrier for making property purchases in this period (62%). 

When asked what they hope the authorities would do to stimulate the market, the younger respondents said they wanted lower home loan interest rates and a reduction in downpayment costs. 79% said they expected lower property prices from developers, and 51% called for more attractive home loan refinancing packages from banks. 

 

Many Singaporeans hoping for further ease in ABSD and other property curbs

In terms of property curbs, 63% of respondents said they are hoping for the government to lower the Additional Buyer’s Stamp Duty (ABSD), which is a tax for owning multiple properties. 

Unsurprisingly, this number was the highest among middle-aged Singaporeans (70%), most of which are investors and/or landlords. 62% also want a reduction in Buyer's Stamp Duty (BSD), which is currently up to 4% for residential properties.

Earlier in May, several temporary property relief measures were released, such as a six-month extension for the remission of ABSD for second residential property purchases. As we step in the second half of the year, can Singaporeans expect more of such measures?

It seems not.  

 

Existing property cooling measures will continue

In a TODAY report, the Monetary Authority of Singapore (MAS) said that there will be no easing of the current property curbs. 

MAS says the property market has remained stable in spite of COVID-19

According to the report, Mr Ravi Menon, managing director of MAS, said that there is no need to, as the property market has remained stable and that “the adjustment of the property market has been modest”. 

He credits this to the property cooling measures that have been progressively implemented over the past decade, saying it has “helped to temper price increases and bring prices more in line with underlying economic fundamentals”.  

And he may be right: the peak of the COVID-19 outbreak in Singapore happened in the first half of 2020, and during that period, property prices did remain relatively stable. 

Private property prices only fell by about 1% in the first half of 2020

In Q1 2020, before the circuit breaker, private residential property prices fell by 1%. In Q2 2020, it fell by 1.1% (based on Urban Redevelopment Authority (URA) flash estimates).  

As such, it seems like the sentiment around worsening housing affordability is not due to rising prices. Instead, it could be due to other economic uncertainties, like job losses, reduced income and the general effects of a recession. Even for those who are currently largely unaffected, concern about the future could very well influence their perceptions and hence, property-related decisions. 

Additionally, many of the study responses also revolved around easing immediate cash flow. Reducing downpayment costs will lower the upfront payments required for new buyers, and more attractive refinancing interest rates will lower the recurring monthly repayments for existing homeowners servicing a mortgage. 

 

So what can home buyers do? 

As mentioned, if you were waiting it out and hoping for the government to relax their property cooling measures, tough luck. It’s probably not going to happen. 

If you’ve done your research, you’d realise that different analysts have different takes on where we will go from here. Some expect prices to continue downwards, while others remain optimistic due to the reasonably healthy demand for recent launches. 

Truthfully, there is none more likely than the other, and we would advise against trying too hard to predict the future. We are in uncharted waters, so it’s hard to say for certain how the real estate market will continue from here. 

If you are actively looking to purchase a home, you can continue keeping an eye out for good bargains instead of waiting for relief packages. Private property prices have been trending downwards (however slightly), and many developers are offering attractive discounts and incentives to encourage sales. 

You can try your luck with developments that are nearing their ABSD, as these are more likely to go on fire sale. We’ve compiled a list here: 10 Condos To Watch For Fire Sales As They Approach ABSD Deadline in 2020/2021

Alternatively, you can consider a smaller home. If you don’t mind one-bedders, you can even score a freehold unit with under a million. See our top 21 freehold condos in Singapore under $600,000.

 

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