Analysts noted that the extra revenue will come from the sale of ultra-luxurious properties priced above $5 million.
While the recently announced higher buyer’s stamp duty is not expected to put off home buyers, the hike will mean additional revenue for the government to pay for growing expenditure in areas such as infrastructure and healthcare, reported the New Paper.
Based on the transactions recorded last year, the extra duties collected would have stood at around $200 million, said JLL’s national research director Ong Teck Hui.
Moving forward, the government could raise an extra $411 million, given the higher expected transaction values as well as land acquisitions, estimates Christine Li, research head at Cushman & Wakefield.
Market watchers noted that although two-thirds of properties transacted in 2017 were priced at above $1 million, most of the government’s extra revenue will come from the sale of “ultra-luxurious” properties priced above $5 million, the buyers of which have the ability to shoulder a marginal increase of $40,000 and above in stamp duty.
With this, Li believes the hike in stamp duty would not hamper the recovery of the private property market, which rebounded in H2 2017 following three years of decline.
In concurring, a CDL spokesman said: “We believe discerning buyers will see the strong potential of property investment in Singapore compared with other global cities like Hong Kong, where prices have increased significantly.”
Li added that the government’s $1 million cut-off strikes a balance.
“If the cut-off is too high or too low, you might not generate the right amount of tax revenue, or you may affect most of the population,” she said. “And if you increase the margin to five percent, it may destabilise a residential market that has only just embarked on its recovery.”
Finance Minister Heng Swee Keat announced on Monday (19 February) that the stamp duty on the value of a property above $1 million would be increased from three percent to four percent, with immediate effect.