The first 9 months FY2023 saw a 1.7% increase in the amount of stamp duties collected, to S$4.51 Billion.
Tax rates and property values (AVs), both of which were increased in 2022, led to a growth of 12.6%, or almost S$3.4billion. A property’s rental values are used to calculate AVs, which have increased by 30 per cent in both the private and public sector residential rents.
Stamp duty revenue in the first three quarters (April-December 2023) of FY2023 increased from S$4.43 to S$4.51 bn. The FY2023 total is expected slightly higher than the FY2022, where it stood at S$5.95billion.
The S$5,26 billion collected during 9M FY2021, is 14.3% lower than the total of S$9,023 in FY2023. It is 39.7 percent higher than S$3.23billion in 9M FY2019. This data comes from the Singapore Department of Statistics.
In the first nine months, the amount collected for stamp duties on property rose by 1.7% compared to the previous fiscal year. It now stands at S$4.51billion.
The slight increase in revenue, which came after a year with lower transaction volumes and higher duty levels, was a reverse of the previous period of nine months when stamp duty revenues fell by 15.7%.
Some hot sectors in an ice-cold market
In 2023, new and resale sales will decline year-on-year, but the private residential price index will rise 6.8 per cent.
This would have resulted in a decrease in stamp duties collected because the increase in price could not compensate for the reduction in secondary market transaction where stamp duty was payable.
According to data from the Urban Redevelopment Authority, approximately 6,452 new homes will be sold in 2023. This is the lowest level since 2008, which saw 4,264 new homes sold. Last year, the number of condominium resales was estimated at 10,166 units. That’s about 15% lower than 2022.
In 2023, however, stamp duty revenues rose, so the difference could have been due to the sale of commercial or conservation shophouses. Their values increased sharply.
The funds were stashed in conservation shophouses. last month, DBS receivers put up for auction shophouses that belonged to entities connected to suspects of the S$3 billion case. The proceeds were to be recovered.
While new home sales dipped 9 per cent, sub-sales jumped 59 per cent. Sub-sales include secondary transactions before the completion of a construction project.
Property tax bills are higher
In 9M FY2023, revenue from property tax increased by 12,6%, from S$3,02 billion the previous year, to S$3.4 Billion. This is expected to increase further in FY2024.
revenue for residential property tax will grow by about S$600m between 2024 and 2028, which is more than 60% higher than the original estimate of S$380m. The government attributed this to the higher AVs, which rose in conjunction with rents both for private and public housing.
In 2024, for example, the average rental value of owner-occupied homes will increase by 20 per cent due to the rise in market rents from 2022-2023.
The 9M FY2023 numbers are based on the 2022 AVs. This is because private home rentals rose by close to 30% in 2022. The property tax rates were raised in 2023.
In the past year, more condominiums have been completed and may be the reason why more homeowners are paying property tax.
Analysts expect that property tax collections will increase by a greater amount than stamp duty.
The government projected earlier that stamp duty collections would reach S$5,75 billion by FY2023. Singapore’s Gross Domestic Product is expected to increase by 0.8 percentage points, from 0.9 percent in FY2022 to 0.8 in FY2019.
Property tax revenue is projected at S$5.55bn in FY2023, up 9.6 per cent on FY2022’s S$5.06bn.
When the 2024 numbers are released, it will be interesting to see just how much the property taxes have increased.
It is due to the fact that there has been an important step-up in the AVs on private residential property.
In 2024, property taxes would increase by 15 percent and stamp duties by between 5 and 10 percent. Overall, combining them would result in an overall increase.
The ABSD Effect
ABSD rates have risen significantly, especially for foreigners and second-time homebuyers.
In April 2010, the ABSD rates for foreigners doubled, to 60 percent. The ABSD was also raised to 20 percent for Singapore citizens who were second-time buyers and 30 percent for permanent residents.
For developers subject to ABSD, the rates for land purchases will increase to 35 percent in 2021 from 25 percent previously.
BSD, which is now charged at 6%, would have likely fueled stamp duty collection during 9M FY2023, since the majority of residential deals were driven by owner-occupiers.
Singaporeans bought 14,019 private homes, or 82.1%, between April and Decembre last year. Permanent residents represented 15.5% of buyers with 2,647 deals, and foreigners accounted for just 2.1 percent with 356.
In that period, more land parcels also were sold as the government increased supply.
In the 9M period of FY2023, the estimated land values under the Government Land Sales program and en-bloc market totaled S$8.4 Billion, 27.1% higher than one year earlier.
