This year was marked by several housing measures announced by Singapore’s government that altered the landscape of the local real estate market.
These measures were put in place, first and foremost, to ensure Singaporeans are given a fair chance at owning a home, and preventing speculative buying. This in turn, prevents a “real estate bubble” from happening. In this article, we will provide a quick recap of the changes that were announced which will be important to take note of moving forward in your property journey.
Budget 2023 Announcement on Housing Measures
The first slew of measures that was announced in 2023 came in the Budget 2023 speech delivered by Deputy Prime Minister Lawrence Wong. Among the housing measures announced are as follows:
1. Increase in Buyer’s Stamp Duty (BSD) Rates
Buyers of residential and non-residential properties of a higher value would be subjected to a higher rate of Buyer’s Stamp Duty.
Residential Properties
Residential properties with value in excess of $1.5 million to $3 million will be imposed a 5% tax, and properties with a value of more than $3 million will be taxed at 6%. This was an increase for both tiers which previously stood at 4%. Below is a table illustrating the latest rates based on the property’s value.
Non-residential properties
Two additional tiers were added to include a 4% tax on non-residential properties with a value of more than $1 million up to $1.5 million, properties with a value in excess of $1.5 million will be taxed at 5%. Previously, the rate was a blanket 3% on the excess value of $360,000. Below is a table illustrating the latest rates based on the property’s value.
2. Increase in CPF Housing Grant for first-timers buying resale HDB flats
It was also announced that additional grants will be provided for eligible first-timers wishing to purchase a resale HDB flat, including both families and singles.
Families
The grant for eligible first-timer families buying a 4-room or smaller flat was increased by $30,000, bringing the grant amount up to $80,000.
For families buying a 5-room or larger flat, the grant was increased by $10,000, bringing the grant amount up to $50,000.
Including the Enhanced CPF Housing Grant (EHG) and Proximity Housing Grant (PHG), eligible families may be afforded a total of up to $190,000 in grants.
The table below illustrates the breakdown of grant first-timer families may be eligible for based on monthly household income.
Singles
After the increase in grants for singles, eligible applicants may receive up to $40,000 for a 4-room or smaller flat, and up to $25,000 for 5-room and larger flats.
The table below illustrates the breakdown of grant first-timer singles may be eligible for based on monthly household income.
3. Additional Ballots for BTO flats
It was also announced in Budget 2023 that additional ballots will be given to certain priority groups applying for BTO flats. A new priority category, the First-Timer (Parents & Married Couples) scheme, was added to give additional ballot chances to first-timer families with Singaporean children aged 18 and below and married couples aged 40 and below applying for their first HDB BTO flat.
To be eligible for this scheme, families must not have previously owned or sold a residential property, nor had the opportunity to reserve a flat in the five years preceding their application. This new priority scheme has taken effect from the August 2023 BTO sales exercise.
Government Press Release on 27 April 2023
Latest Round of Cooling Measures
The latest round of cooling measures announced through a press release by the government on 27th April 2023 sent shockwaves throughout Singapore’s real estate sector. It came just half a year after the previous round of cooling measures were announced on 30 September 2022. In the latest cooling measures, the Additional Buyer’s Stamp Duty (ABSD) was increased with immediate effect. After the revision, the ABSD rates are as follows:
Singapore Citizens
Singapore citizens buying their second residential property would be imposed a 20% ABSD, up from the previous rate of 17%. The third and subsequent purchase of residential properties will be taxed at 30%, up from a previous rate of 25%.
Permanent Residents
An increase from 25% to 30% for Permanent Residents purchasing their second residential property, and an increase from 30% to 35% on the third or subsequent residential property.
Foreigners, Entities, and Trusts
This cohort was hit hardest by the ABSD increase, foreigners will be taxed a hefty 60%, up from 30%, on any residential property purchased regardless if it’s the first or subsequent property. Entities and Trusts will be taxed at 65%, up from 35%, on any residential property purchased. The table below shows the breakdown of the ABSD adjustments that was announced on 27 April 2023.
Ramping Up Housing Supply
It was also announced in the press release that the government would ramp up supply of public and private housing to address concerns surrounding the availability and affordability of housing options.
For private residences, the government announced that the supply would be increased to 4,100 units for the first half of 2023, this was an increase from 3,500 units for the second half of year 2022.
23,000 units of new HDB flats will also be launched in 2023, part of the government’s previous forecast of 100,000 new flats between 2021 to 2025.
National Day Rally 2023: New Classification Framework for HDB flats
As part of the National Day Rally speech 2023 delivered by Prime Minister Lee Hsien Loong, one of the most significant announcements was the reclassification of HDB flats. This reclassification is a necessary step towards ensuring HDB homes are accessible to all Singaporeans, as well as to maintain a fair system while achieving a good social mix in each region.
Commencing from the second half of 2024, newly launched HDB BTO homes will be classified into three distinct categories: Standard, Plus, or Prime projects. This marks a departure from the existing classification system, which distinguishes between mature and non-mature projects. Notably, BTO flats introduced before the second half of 2024 will retain their classification as either mature or non-mature projects.
Accompanying these new classifications are additional eligibility requirements and conditions:
Standard HDB flats
Flats under the Standard category will make up the bulk HDB flats nationwide, with the same eligibility requirements and conditions as present. Homeowners of Standard BTO flats will need to abide by the 5-year MOP, it can be rented in its entirety after the MOP, and sold without any income ceiling restrictions for the resale buyer after the MOP. The grants allocated for Standard flats will remain consistent with the current grant structure.
Plus HDB Flats
This new category was introduced during the National Day Rally speech, and it will be designated to HDB projects that are outside the Central area, but still in a more preferable location. These projects will be near MRT stations and town centres, with amenities nearby. Plus flats will come with more subsidies but with stricter restrictions than Standard flats.
Among the restrictions are a 10-year MOP, and flat owners will not be able to rent out the whole unit at any time, even upon completion of the MOP. An income ceiling of $14,000 (families and singles) will apply to resale buyers. Downgraders from a private property will have to face a 30-month wait-out period after disposing their private property before applying for a Plus BTO flat. Lastly, owners will face a subsidy clawback upon selling the flat.
Prime HDB Flats
These flats are in choicest locations within Central areas that are currently offered under the Prime Location Housing (PLH) model. Prime flats will come with the most subsidies but tightest restrictions. Resale buyers of Prime flats will have to fulfil all BTO eligibility conditions, including the $14,000 income ceiling.
Similar to Plus flats, other restrictions imposed on Prime flats are a 10-year MOP, and owners will not be able to rent out the whole unit at any time. Private property owners will have to face a 30-month wait-out period, and a subsidy clawback will be imposed upon the flat’s sale.
Essential Points: 2023 Housing Measures Announcements
Singapore’s Government is Committed to Stabilising Property Prices
Despite potential discontent over increased stamp duties, this measure aims to safeguard the affordability of housing for all Singaporeans, preventing property prices from escalating beyond their means.
Tackling Concerns About Housing Availability and Affordability
To address the housing needs and ensure affordability for Singaporeans, the government is committed to increasing the supply of both private and public housing. The additional grants further alleviates the affordability of homes for a significant majority of Singaporeans. We previously did an in-depth analysis on how the additional grants may help Singaporeans in their journey for their first home. Explore further details here. Additionally, the allocation of extra BTO ballots for specific priority groups underscores the government’s commitment to meeting housing needs.
Revamping the HDB BTO Framework
The introduction of the Standard, Prime, and Plus classifications for future BTO projects, accompanied by stringent conditions, is a proactive effort to provide Singaporeans with a fair chance at securing housing. This initiative aims to preserve a balanced social mix in each neighbourhood and uphold fairness in the system. This restructuring is a necessity as most non-mature estates have undergone significant development.
Long-Term Implications
The long-term effects of recent measures remain uncertain. While increased ABSD aims to curb property price escalation, foreigners (comprising only 10% of transactions) and affluent Singaporeans may still find Singapore’s real estate appealing. We’ve delved into the impact of the increased ABSD on Singaporeans’ property portfolios. For more details, read here. While efforts to aid Singles are noted, concerns persist over housing availability and age criteria. The HDB BTO framework’s reclassification raises worries about a potential surge in demand for Standard flats due to strict conditions on Prime and Plus, potentially driving Standard prices above Prime and Plus. We’ve explored the potential impacts of the HDB BTO reclassifications, click here to read on.
Closing Thoughts
In summary, while recognising that a universal solution may not exist for all concerns, we believe that the benefits of this year’s announced measures outweighs the negatives. These initiatives effectively control property prices, with ongoing efforts to provide opportunities for deserving Singaporeans to secure a home. Most importantly, some of these measures are specifically designed to maintain public housing as a means to attain a home rather than for profit-driven speculation.
If you are looking for guidance in your real estate journey, feel free to reach out to us. We will be glad to guide you through the process and offer a tailored consultation to help you reach an informed decision.
Thank you for reading and following PLB. Do stay tuned as we bring you more updates and insights on Singapore’s real estate market.
Disclaimer: Information provided on this website is general in nature and does not constitute financial advice or any buy or sell recommendations.
PropertyLimBrothers will endeavour to update the website as needed. However, information may change without notice and we do not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyLimBrothers does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, PropertyLimBrothers, its employees do not accept any liability for any error or omission on this web site or for any resulting loss or damage suffered by the recipient or any other person.
