Budget 2024 was a good thing for single Singaporeans on the housing front. A single Singaporean aged 55 or above who meets certain conditions can claim the refund of Additional Buyer Stamp Duty (ABSD), which they paid on their second home.
The ABSD rebate is significant, since a Singaporean buying a secondary home will pay ABSD of 20 percent. As an example, the ABSD refund totals S$300,000.
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If the property is not completed at the time of purchase, then the single local must sell the first property within six months from the date of purchase for the second home. Also, the value must be less for the second home than it was for the first.
As of now, married couples that include at least one Singaporean can receive ABSD relief when they purchase a second property. They must meet certain conditions such as disposing of their first home in a stipulated time frame.
Although married locals may enjoy a number of advantages over singles on the housing markets, singles make up a significant demographic.
In 2023 single residents will make up 30.4% of those residents in their 30s. 14.9% of those residents in 40s. 11.8% of those residents in 50s. and 10% of residents in 60s. In 2010, singles in the 30s, 40s 50s and 60s accounted for 24,5%, 13,8%, 11,7%, and 7.5 % of all residents.
Singapore is a land-scarce country, so homes should be primarily built for the owner. The private housing market should have curbs to maintain a stable environment where prices are not inflated and there is no boom and bust cycle. This will be welcomed by all stakeholders, including buyers, developers, and owners.
Singapore boasts an impressive home ownership rate of 90 per cent.
Housing mobility also matters, because many households’ housing requirements may change over the years. Households will also have sub-optimal outcomes when they are unable to move from one home into another that suits their needs.
Moving house can be due to a change in the size of your household. As an example, the size of a household may increase when a couple gets married or elderly parents decide to move in with their grown children. A household may shrink in size as adult children move away from their parents.
Some households want to relocate so they can save time and money by living near a certain school or workplace.
A move for financial reasons is also a common reason. Some households want to upgrade to an exclusive condominium or landed home as a way to recognize their success in business or career.
When an owner’s finances decline or retires, they may want to exchange a high-priced home for one that is cheaper. The process can result in a significant amount of money being freed up and financial stress reduced.
As Singapore’s population ages, many elderly Singaporeans may wish to move to a house that is more manageable or more suited to their needs.
In the end, a home that is the right size, cost, location or specification can bring peace and harmony to a household and improve its mental health.
A household who trades in one home that is owner-occupied for another does not want to increase its property portfolio. This would make it unfair for a household to be required to pay the ABSD rates applicable to residents who buy a second house.
Can the ABSD regime make it more favorable for locals? They are already eligible for ABSD benefits when they buy a second home. However, one condition is that they must sell their primary home within a certain time period.
You could allow them to get a partial refund before paying ABSD. They can instead be forced to pay ABSD on the second home if they do not sell their first house within the time limit.
It is true that paying ABSD upfront and then getting a rebate later can cause a significant strain on cash flow for some households. This could also be a barrier to moving home.
Also, make ABSD treatment more friendly for other groups, like local singles below the age of 55, and married couples who are permanent residents.
Many PRs contribute to the economy, so it is justified that we help PR couples. The ABSD rate for home purchases is clearly a favouritism towards citizens.
Local singles under 55 and PR couples will need to sell the sole home they own before buying a new home to avoid paying ABSD.
In the meantime, local singles and couples in PR might have to pay for a rental home. If the price of a home increases, then those who decide to sell their existing home first and buy a replacement may be in a tough spot.
Perhaps the ABSD should be available to singles even if they are trading in their current owner-occupied house for a newer, more expensive home.
Singapore has a high-quality public housing system, good transport connections and a well-planned city. These factors support the housing mobility of its residents. Locals have the option to switch from public housing to private or vice versa. Or, they can relocate anywhere in Singapore.
Housing mobility can be hampered by the costs involved in moving from a home that is owner-occupied to another.
For a S$1.5million home, the stamp duty is around 3 per cent. For a S$3million home it’s 4 per cent. ABSD can also add a lot to the cost of a transaction.
ABSD can be made more friendly for residents looking to move between owner-occupied homes.