Singapore Budget 2024 and How it affects the Property Market
The 2024 Budget plan was unveiled by Minister Lawrence Wong, placing a strong focus on "improving education and training" and providing financial support to specific demographics. Among the benefits are $1.9 billion allocated for various forms of household assistance, updates to the Central Provident Fund (CPF), and aid for Singaporean renters. A notable update concerns adjustments in property taxation. In this post, we are going to focus on the announcement that have a direct impact to the property market and home ownership in Singapore.
Revisions to Property Tax
The most impactful modification in the housing sector is the adjustment of property tax rates. Previously, in 2022, there was a hike in property taxes for residential buildings, aimed at imposing a wealth tax on upscale, luxurious properties.
Due to a general rise in rental prices from 2022 onwards, the Annual Value (AV) of residential properties has escalated, leading to increased tax rates for properties at the lower end of the market as well. Initially aimed at the top seven percent of owner-occupied homes by value, the increase inadvertently affected the top thirteen percent.
Property Tax Modifications from January 2025 From January 2025, there will be a revision in the AV brackets for the tax rates on owner-occupied residential properties. This revision aims to ensure that owners of premium properties bear a larger portion of the tax burden, while the majority of Singaporeans will see their property taxes remain the same or decrease
New Annual Value Bands for Owner-Occupied Residential Property Tax Rates Starting January 2025
Source: Ministry of Finance
For retirees residing in higher value homes who might face liquidity issues, a 24-month interest-free instalment plan will also be made available.
Expected Outcomes
A concern for the government has been the financial strain on older citizens residing in high-value homes without corresponding wealth or income. Some Singaporeans, not necessarily affluent, have inherited valuable properties, which could now face substantial taxes. Despite the availability of an interest-free payment plan, it might prompt some owners to downsize to more affordable housing.
For most homeowners of standard flats or condominiums, these changes should not significantly affect their tax liabilities. For wealthier individuals, the adjustments are unlikely to be a deterrent, given their financial resilience.
ABSD Concessions Expanded
The Additional Buyer's Stamp Duty (ABSD) remission, previously available to married couples under certain conditions, will now extend to single Singapore citizens aged 55 and above, aiming to facilitate downsizing to more affordable housing.
Impact on Developers
For developers, the ABSD remission criteria have been relaxed to require the sale of at least 90% of units within a development, encouraging a more diverse range of housing options to meet market demands.
Rental Vouchers for Young Families
A one-time rental voucher will be provided to young families under the Parenthood Provisional Housing Scheme (PPHS), aiding them while awaiting their Build-To-Order (BTO) flats. This complements existing measures to address the high demand for housing. Follow this Link to stay updated on the PPHS open market Voucher.
The 2024 budget primarily focuses on adjusting existing policies to better meet the needs of various groups, demonstrating the government's responsiveness to unintended consequences and its commitment to maintaining equitable housing policies.
