In the first nine months of FY2023, property stamp duty collections increased by 1.7% to S$4,51 billion
The amount of stamp duty collected by the government in the first nine-month period of its current fiscal year increased by 1.7 percent from the previous one to S$4.51 Billion.
Stamp duty revenue was down 15.7% in the nine-month period prior to this, despite a lower volume of transactions and higher rates.
In 2022, both the tax rates and annual values of properties (AVs), which are based on rental value, were raised. The result was a 12.6% increase in property tax receipts. Based on the rental value of a property, AVs are now higher, reflecting an increase of 30 percent in private and public residential rentals in 2022.
Stamp duty revenues for the first quarter of FY2023 (April to December 2023) increased to S$4.51 Billion from S$4.43 Billion in the same period last year. The total is expected to be slightly higher in FY2023 than it was in FY2022, which stood at S$5.95billion.
The total collected in the first nine months of FY2023 is S$5.26billion, which is 14.3% less than in the 9M of FY2021. According to data from Singapore Department of Statistics, the 39.7 percentage is higher than the S$3.23 Billion netted during 9M FY2019.
Hot sectors in a cool market
In 2023 both new sales and resale transaction declined on an annual basis, while the index of private residential prices rose by 6.8 percent.
The price increase was not enough to offset the decline in secondary market transactions that are subject to stamp duty.
The Urban Redevelopment Authority reported that in 2023, around 6,452 private homes had been sold. This is the lowest number since 2008 when 4,264 homes were sold. The estimated volume of resale condominiums last year was 10,166 units. This is around 15% less than the estimated volume for 2022, which is 11,949 units.
The fact that (stamp duties revenue) increased meant that the variance may have come from the sales of commercial and conservation shops, whose values rose sharply by 2023.
It has been revealed that funds from illicit gains have been parked in conservation shophouses. Last month, receivers acting on behalf of DBS put up for sale a number of shophouses owned by entities that were linked to the suspects in the S$3 Billion money laundering case. This was the beginning to recoup proceeds.
While new home sales dipped 9 per cent, sub-sales jumped 59 per cent. Sub-sales are secondary sales transactions that occur before a project is completed.
The ABSD effect
ABSD rates for foreigners, second-time buyers, and developers have increased significantly compared to the rates of 2018.
The ABSD doubled in April of last year to 60%. The ABSD rate has also been increased to 20% for Singaporeans who are second-time home buyers, and 30% for permanent residents.
The rate for developers who are subject to ABSD in their land purchase has increased from 25% to 35% by 2021.
BSD at 6 percent was likely to be the main driver of stamp duty collections in 9M FY2023, as most residential transactions are driven by local owners.
Singaporeans purchased 14,019 homes between April and December of last year. This represents 82.1% of all transactions. Permanent residents made up 15.5% of all buyers, with 2,647 purchases. Foreigners made up just 2.1% with 356 transactions.
During that time, the government increased its supply of land parcels.
The estimated value of land under the Government Land Sales Programme and the en bloc market in the 9M FY2023 totaled S$8.4billion, 27.1 percent higher than the previous year.
Increased property tax bills
The revenue from property taxes grew by 12.6% to S$3.4billion in 9M FY2023, compared to S$3.02billion in the same period last year. It is also expected to grow further in FY2024.
revenue generated from residential property taxes is expected to increase by approximately S$600,000,000 by 2024, which is nearly 60% more than the initial estimate of S$380,000,000. This was attributed to the fact that AVs rose along with rents in both public and private housing.
The AVs for most owner-occupied houses will have increased by over 20 percent in 2024 due to an increase in the market rental rates from 2022 to 203.
The FY2023 9M figures are based upon 2022’s AVs. These should have increased by 20-30% due to the private home rents increasing close to 30% that year. In 2023, property tax rates were also increased.
The completion of more condominiums last year may have led to an increase in the number of homeowners paying property taxes.
Some analysts predict that the total year will see a small increase in stamp duties and a bigger jump in property taxes.
Stamp duty collections were projected by the government to reach S$5.75billion in FY2023. Singapore’s GDP is expected to be 0.8 percent higher in FY2023 than in FY2022 or FY2019.
Property tax revenues are projected to reach S$5.55billion in FY2023, a 9.6% increase from S$5.06billion in FY2022
The property tax rates will be published in 2024. It would be fascinating to see how they have risen.
The AVs for private residential properties have been upgraded significantly.
Stamp duties would fall by 5 to 10%. When combined, the total would still result in an increase.
