The Singapore government aims to take the heat off property market by introducing yet another tightening measure: additional buyers’ stamp duty (ABSD) in 8 Dec 2011. This is in addition to the Jan 11 cooling measures and is deemed harsher as it directly affects buyers’ investment margins and developers’ ability to price. The prices of luxury properties will correct at least 20% latest by next year, coinciding with the slowdown in global economy, while the demand for mass-market units shall remain steady
According to statistics, foreigners made up 19% of private home sales in 2H11 and 36% of new units sold YTD. A foreigner will now need to pay 13% more for a property while investors must be prepared to pay 6% more, with the introduction of ABSD. In addition, PRs buying their second and subsequent properties will have to pay an ABSD of 3% (6%), while Singaporeans buying their third and subsequent residential properties will also pay an ABSD of 3% (6%). First-time Singaporean private home buyers and buyers of HDB flats will not be affected.
Investors shall underweight property counters for the time being and continue to buy REITs for its dividends and defensive in nature. Meanwhile, CityDev is highlighted as the top underperform by most brokerage houses.
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