Award Banner
Award Banner

Is this new ABSD rule a sign?

Is this new ABSD rule a sign?
PHOTO: Stackedhomes

When we started seeing runaway prices after Covid, there was a sense of "not this again," and most market watchers had flashbacks to 2009 to 2013, or the 2017 en-bloc fever. The last two times property prices skyrocketed, some of the more common scapegoats were:

  • Developers being too exuberant, and 
  • Foreigners pushing up prices

So we saw the slew of responses, from new cooling measures to higher Land Betterment Charges (LBC). But as the post-covid phase came to a close, there was a sense that analysts and regulators were missing something. 

Foreigners had been hit with the highest ABSD rate ever, with taxes doubling to 60 per cent; and we saw prices dip in the most affected areas. But still, property prices remained high. 

Then the expected "second round" of en-bloc fever never materialised; and far from being exuberant, developers have been at their most muted and timid in decades. The government likely sat up and took notice when the bid for a Marina Bay white site — with what would have been a hot commodity previously — drew one lonely bid; and that bid was so low, URA rejected it and didn't sell. 

Clearly, things are different now; and the high prices aren't easily blamed on foreigners (even the money-laundering ones), or on developers getting cocky. In fact, some realtors have commented about how few Singaporeans are willing to sell (at today's prices, what can they buy even if they sell an $800,000 4-room flat? A two-bedder where a second toilet is a priced-out luxury? Forget it.

The changes to ABSD clawback may be a sign that things are changing

It's not a huge change, but it is the very first time we've seen the government budge on it. 

Under the old rules, developers had five years to complete and sell every single unit; failing to do so meant they forfeited the ABSD, which is 40 per cent of the land price. Developers could get ABSD remission of up to 35 per cent, if they completed and sold out in five years. 

The government didn't really care how many units were involved: a 1,000 unit development had the same time limit as a 50 unit development. 

Now, after Budget 2024 and the Marina site bid, we have a concession: If a developer can complete the project in five years, and sell out at least 90 per cent of the units, they can get partial ABSD remission. The amount of the remission will vary based on the number of units they have left over.

Besides providing a small modicum of relief, this may (just may) have the following effects:

  • Developers may be less hesitant to build larger, high-quantum units, which are typically the last ones to move 
  • Fire sales (i.e., developers rushing to bundle and en-bloc remaining units for sale to meet ABSD deadlines) might be a little less frequent; or may be a little less drastic, depending on the developers' cost calculations 

Depending on how the property market and land bids move, we may see further concessions in the near future. Some of the changes developers have long clamoured for is that ABSD remission be pegged to how many units are left in total, or instead of a strict five-year timeline — it should be instead scaled accordingly to the number of units that they are undertaking.

Then again, there are those in the market who will cheer the existing ABSD rules; probably out of hopes that, with the boot on developers' necks, they'll also be inclined to price new launches cheaper. 

Weekly sales roundup (Feb 12 – Feb 18)

Top 5 most expensive new sales (by project)

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
TERRA HILL $5,388,430 1894 $2,844 FH
KLIMT CAIRNHILL $5,230,000 1496 $3,496 FH
THE RESERVE RESIDENCES $3,919,463 1625 $2,411 99 yrs (2021)
PINETREE HILL $3,646,000 1464 $2,491 99 yrs (2022)
GRAND DUNMAN $3,630,000 1432 $2,536 99 yrs (2022)

Top 5 cheapest new sales (by project)

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
THE LANDMARK $1,472,640 517 $2,850 99 yrs (2020)
THE MYST $1,542,000 678 $2,274 99 yrs
GRANGE 1866 $1,584,000 527 $3,003 FH
IRWELL HILL RESIDENCES $1,647,000 624 $2,638 99 yrs (2020)
PINETREE HILL $1,927,000 797 $2,419 99 yrs (2022)

Top 5 most expensive resale

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
ARDMORE PARK $12,900,000 2885 $4,472 FH
CAIRNHILL PLAZA $5,400,000 2852 $1,893 FH
THE SEAFRONT ON MEYER $4,828,000 2088 $2,312 FH
CAPE ROYALE $4,410,000 1905 $2,315 99 yrs (2008)
CARIBBEAN AT KEPPEL BAY $3,600,000 2099 $1,715 99 yrs (1999)

Top 5 cheapest resale

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
PRESTIGE HEIGHTS $620,000 344 $1,823 FH
CARDIFF RESIDENCE $668,000 398 $1,607 99 yrs (2011)
HIGH PARK RESIDENCES $683,500 441 $1,631 99 yrs (2014)
THE PROMENADE@PELIKAT $685,000 484 $1,486 FH
LA FIESTA $690,000 452 $1,626 99 yrs (2012)

Top 5 biggest winners

PROJECT NAME PRICE S$ AREA (SQFT) $PSF RETURNS HOLDING PERIOD
ARDMORE PARK $12,900,000 2885 $4,472 $7,066,041 28 Years
HILLCREST ARCADIA $2,980,000 2325 $1,282 $1,830,000 28 Years
PARK EAST $2,700,000 1755 $1,539 $1,815,000 21 Years
THE SEA VIEW $3,500,000 1410 $2,482 $1,700,000 16 Years
BISHAN PARK CONDOMINIUM $2,080,000 1539 $1,351 $1,455,000 17 Years

Top 5 biggest losers

PROJECT NAME PRICE S$ AREA (SQFT) $PSF RETURNS HOLDING PERIOD
THE LINE @ TANJONG RHU $1,020,000 570 $1,788 -$300,000 10 Year
THE OCEANFRONT @ SENTOSA COVE $3,550,000 1776 $1,999 -$150,000 13 Years
VISIONCREST $2,860,000 1227 $2,331 -$110,000 17 Years
SKIES MILTONIA $1,270,000 1076 $1,180 -$80,000 11 Years
THE ROCHESTER RESIDENCES $1,288,000 1023 $1,260 -$78,268 16 Years

Transaction breakdown

ALSO READ: 6 unexpected million-dollar HDB flats in Singapore: Here's where to find them

This article was first published in Stackedhomes.

This website is best viewed using the latest versions of web browsers.