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April Property Cooling Measures: Will they Affect Your Property Price?


If you're a property owner or planning to buy one, you might have heard about the latest property cooling measures that were implemented on 27 April 2022. The question on everyone's mind is, will these measures affect your property price? Let's take a closer look.

Let's take a closer look at the changes. The ABSD rates have been increased as follows:

a. 17% to 20% for Singaporeans buying their 2nd residential property b. 25% to 30% for Singaporeans buying their 3rd and subsequent residential property, and Permanent Residents (PRs) purchasing their 2nd residential property c. 30% to 35% for PRs buying their 3rd and subsequent residential property d. 30% to 60% for foreigners buying any residential property e. 35% to 65% for entities or trusts buying any residential property, except for housing developers.

Firstly, the ABSD rate increases will only affect around 10% of residential property transactions based on 2022 data. This means that the impact will be quite limited. The aim of these measures is to control the number of people owning more than one property and foreign investors who are looking to invest in property.

The ABSD rate increases for Singaporeans purchasing their second and third residential property and Permanent Residents (PRs) purchasing their second residential property are around 3-5%. For example, if a Singaporean is buying a second property worth $2 million, they will need to have around $1.5 million cash on hand due to limitations on second home loans, ABSD, and standard stamping fees. After the ABSD increase, the buyer will have to prepare an additional $60,000. However, if the buyer has $1.5 million cash on hand, will they stop buying because of the $60,000? Probably not.

The ABSD rate increases for PRs purchasing their third and subsequent residential property, foreigners purchasing any residential property, and entities or trusts purchasing any residential property (except for housing developers) are much higher, ranging from 30% to 65%. However, these increases are mainly targeting ultra-high net worth individuals (UHNW) who have at least $30 million in investable assets. Therefore, these measures are more for high-end properties such as those in Sentosa Island. There aren't many of these types of transactions, and they do not have much impact on public housing prices.

Overall, these cooling measures are more about controlling the number of people owning multiple properties and foreign investors while also increasing the country's coffers. The factors that have a significant impact on public housing prices are still the interest rate and the supply of housing. Cooling measures aim to decrease the demand for housing, but this round of cooling measures does not have much impact on the major demand.

In conclusion, if you're a property owner or planning to buy one, the April property cooling measures are not likely to have a significant impact on your property price. However, it's always good to keep an eye on any changes in the property market and be prepared for any potential fluctuations in price.

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