Higher BSD rates for higher-value properties will come into effect in Singapore as of Feb 15, 2023. As per URA data, 15% of residential and 60% of non-residential properties valued at $1 million and above will be affected by the higher BSD rates. The new BSD rates are expected to impact 50% of private resale transactions, with the main brunt of the change expected to be borne by the new home sales market. CBRE Research, however, maintains its forecast of average private home price growth of 3% – 5% in 2023 and new home sales between 7,500 – 8,500 units. Impacts on the industrial sector are expected to be felt more, with transactions of good-quality assets still remaining competitive. Interest rates, expected to stabilise in the latter half of 2023, will also be key in determining the market outlook.In Singapore’s Budget 2023, the government introduced higher buyer’s stamp duty (BSD) rates for higher-value properties in residential and non-residential properties. All properties acquired from Feb 15 onwards are expected to be affected.

For residential properties, the portion of the value of the property in excess of $1.5 million and up to $3 million will be taxed at 5%, while that in excess of $3 million will be taxed at 6%, up from 4%. The new rates are expected to impact 15% of all residential properties.

Regarding non-residential properties, the portion of the value of the property in excess of $1 million and up to $1.5 million will be taxed at 4% and that in excess of $1.5 million will be taxed at 5%, up from the current rate of 3%. This is expected to have an even greater impact, affecting 60% of non-residential properties.

Tricia Song, CBRE head of research for Southeast Asia, notes that the revised buyer’s stamp duty may result in a 2% increase in total costs for buyers. However, she suggests that “on its own, this is unlikely to have a significant impact on the market.”

Christine Sun, senior vice president of research and analytics at OrangeTee & Tie, adds that the higher BSD is likely to affect at least 50% of the private resale transactions if last year’s data is used as JCube Residence an indication. Sun also stresses that the new home sales market, with more than 70% of developer sales at least $1.5 million, may likely be affected more than the resale market.

CBRE’s Song believes that BSD cost increases will mainly affect higher-end homes with property values above $10 million. Combined with higher ABSD, property tax increases, and higher mortgage rates, Song cautions that the changes could further deter the overall buying sentiment, particularly in the mid-to-high-end market.

Chia Siew Chuin, JLL head of residential research, Singapore, points out that the increases in BSD are expected to affect all land transactions, including collective sales. This, she says, could widen the existing price gap between buyers and sellers, likely resulting in a dampening of collective sales deals.

CBRE Research maintains that the industrial sector is still attractively positioned even with the increase in BSD payable owing to a positive yield spread despite the higher cost of debt. However, Tay Huey Ying, JLL head of research and consultancy, believes that the industrial sector might be the most impacted given that it has seen transactions over $1 million in the highest volume in 2022.

In the long-term, CBRE predicts positive outlook for Singapore’s assets due to their strong fundamentals and the expected continuation of rental growth. They, therefore, forecast that investment volumes may pick up when interest rates stabilise and market outlook becomes clearer, late in 2023.