MP urges removal of ABSD for Singaporeans

Romesh NavaratnarajahJanuary 26, 2016

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Should a citizen who can afford to buy a second or third property through the Total Debt Servicing Ratio (TDSR) regime also be required to pay the Additional Buyer’s Stamp Duty (ABSD)? This was a question posed by Mr Christopher De Souza in Parliament on Monday, reported Channel NewsAsia.

He urged the government to remove the ABSD for Singaporeans while retaining the ABSD for foreigners and TDSR for Singaporeans.

“By retaining the TDSR, the Singaporean is only going to be allowed a credit line that is within his means. By retaining the ABSD for foreigners, we help ensure that the foreigners will not enter the Singaporean market in an overly speculative way,” said the MP for Holland-Bukit Timah GRC.

First introduced in December 2011, the ABSD was revised upwards in January 2013 to rein in Singapore’s escalating residential property prices.

Singaporeans are required to pay an ABSD of seven percent for a second property, and 10 percent for a third and subsequent property. However, foreigners are required to pay an ABSD of 15 percent for their first and subsequent property purchases.

Meanwhile, the TDSR framework limits the amount borrowers can spend on debt repayments to 60 percent of their gross monthly income.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg

Nagarajan
Mar 15, 2016
ABSD removal at this point will cause ripples in rental market as majority of the second home purchase by SC or new home purchase by SPR/Foreigner will increase supply in the rental market and thereby bringing the Rent down. As the Rents go down, middle/low income people will find it tough to keep up with the EMI (+ increasing interest rates).
Victor Wong
Mar 13, 2016
People keep saying prices had gone up by 60%-70% but has corrected by just 7%-8%. But prices are alone in deciding market forces. The other factor is the people's income or their growing or diminishing affordability to buy. Income has grown by some 70% between 2003 to present day. The current affordability ratio of median housing price to median household income is about 5x. This is more or less a return to the ratio prevailing 12 years ago in 2003 when the property market was in the doldrums. This affordability ratio is the metric to observe. So, even though the price correction from the peak is comparatively little, prices have come down to the affordability level.
Kumar
Mar 08, 2016
More property by more Citizens by taking more loans sounds funny... if Global market goes down, slow economy & foreigners leaving then 3 bedroom condo rent will be 800$ per month and EMI would be 3000$.. scary time.... all the best to 2nd buyers...
Rositah Rozmus
Jan 28, 2016
After all is said and done, isn't it a good thing for Singaporeans to invest in Singapore rather than elsewhere? Abolishing the ABSD will encourage that.
Mabel MK
Jan 27, 2016
Singaporeans who buy 2nd residential property can afford to pay 7% ABSD lah - After all, there is NO GST. So contribute to public coffers to provide subsidies for childcare, education, healthcare, public transport, defence, etc.
SC
Jan 26, 2016
Yes, should be this way. Other than ABSD on foreigners, govt shall consider to impose capital gain tax on foreigners as what OZ is doing. This not only to prevent foreigners from speculation, govt shall have some tax benefit out from the gain.
Omar Khoo
Jan 26, 2016
Even though foreigners would not enter the Singapore property market in a speculative way anytime soon.ABSD should be abolished now,only for Singaporean citizens willing to purchase their second or third properties. The swap of property title ship from distressed mortgage defaulters to Singaporeans who have better credit means would avert a market melt down when the banks start calling in non-performing loans. The government,if they are to tweak the ABSD,should give two months notice to the public in order to let first time Singaporean home buyer make their purchases before their richer peers move in to compete.And again notice to warn the public,if the ABSD for foreign buyers are to be abolished.This is to let Singaporean citizens who had invested abroad,rein in their overseas gains and re-invest in their home turfs Sanction lifted on Iran,a powerful country whose King Darius had thousands years ago control Asia Minor,Egypt and Greek colonies,want direct foreign investment.Think???
Sebastian Chan
Jan 26, 2016
Only One solution needed. Reduce the ABSD so that buyers will get more loan to take and they also will be able to afford for ABSD as they have more loan.
William Toh
Jan 26, 2016
Life is so hard for real estate agents because property prices is so high go up by 68% & just come down by 5% even with uncertain global economic outlook & surely interest rate going up. Core inflation for property is high more policy should be roll out to push prices down to at least 40%.
John Sear
Jan 26, 2016
Yes, good idea. Singaporeans own Singapore, but also Welcome foreigners to invest and know us, stay with us for a while. His suggestions may also encourage SPR to apply for SC!. ABSD for SPR & foreigners should stay so as to discourage foreign speculations. Maybe ABSD should be applied for SC in the 4th Property & onwards. So more SC will not need Govt help in times of retirement.
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