Property stamp duty collection up 1.7% to S$4.51 billion in first 9 months of FY2023

PROPERTY stamp duty collected in the first nine months of the government’s current fiscal year rose 1.7 per cent from the previous year to S$4.51 billion.

The slightly higher revenue – coming in a year of lower transaction volume and higher duty rates – was a reversal of the previous nine-month period, when stamp duty revenue fell 15.7 per cent.

Property tax takings, meanwhile, grew 12.6 per cent to almost S$3.4 billion, after both tax rates and property annual values (AVs) were hiked upwards in 2022. Based on a property’s rental value, AVs have jumped, reflecting a 30 per cent surge in both private and public residential rents in 2022.

Stamp duty revenue for the first three quarters of FY2023 – from April to December 2023 – rose to S$4.51 billion from the year-ago period’s S$4.43 billion. The tally is expected to close FY2023 slightly higher than FY2022, when the figure stood at S$5.95 billion. 

The nine-month total collated so far in FY2023 is 14.3 per cent lower than the collection of S$5.26 billion in 9M FY2021. However, it is 39.7 per cent higher than the S$3.23 billion netted in 9M FY2019, based on data from the Singapore Department of Statistics. 

Stamp duty revenue from property transactions comes from Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD) and Seller’s Stamp Duty.

Certain hot sectors in a cooler market

In 2023, both new sale and resale transactions declined year on year, while the private residential price index rose 6.8 per cent, said Alan Cheong, Savills Singapore executive director for research and consultancy. 

“This should have led to a decline in stamp duties collected, because the price increase could not offset the drop in the number of secondary market transactions where stamp duty is payable,” he said.

Data from the Urban Redevelopment Authority showed that around 6,452 new private homes were sold in 2023 – the lowest recorded since 2008, when 4,264 new homes were sold. Resale condominium volumes last year were estimated to stand at 10,166 units, around 15 per cent lower than 2022’s estimated volume of 11,949 units.

“However, the fact that (stamp duty revenue) rose meant that the variance could have come from the sale of commercial and conservation shophouses, where values rose sharply in 2023,” said Cheong. 

Conservation shophouses, it has emerged, were among assets where funds from illicit gains were parked. Last month, several shophouses held by entities linked to suspects in the S$3 billion money laundering case were put up for sale by receivers acting for DBS, in the start of a process to recover proceeds.

Tan Tee Khoon, country manager for Singapore at PropertyGuru, noted that while new home sales dipped 9 per cent, sub-sales jumped 59 per cent. Sub-sales refer to secondary sale transactions prior to a project’s completion.

The ABSD effect

Against the overall drop in transaction volume, ABSD rates rose significantly for foreigners as well as for second-time buyers and developers, especially when compared to rates before 2019, said Tricia Song, CBRE’s head of research for Singapore and South-east Asia.

In April last year, the ABSD rate doubled to 60 per cent for foreigners. The ABSD rate was also increased to 20 per cent for second-time buyers who are Singapore citizens, and 30 per cent for permanent residents.

For developers that are subject to ABSD on their land purchases, the rate increased to 35 per cent in 2021, from 25 per cent previously.

BSD, now charged at 6 per cent, was likely to have fuelled stamp duty collection in 9M FY2023, given that the majority of residential transactions were driven by local owner-occupiers, said Cushman & Wakefield research head Wong Xian Yang.

Between April and December last year, Singaporeans made 14,019 private home purchases, 82.1 per cent of all transactions. Permanent residents accounted for 15.5 per cent of buyers with 2,647 transactions and foreigners, just 2.1 per cent with 356 transactions. 

Lee Sze Teck, Huttons senior director of data analytics, said more land parcels were also sold in that period as the government ramped up supply.

He said that in the 9M FY2023 period, the estimated land value under the Government Land Sales programme and en bloc market totalled S$8.4 billion, 27.1 per cent higher than a year ago.

Higher property tax bills

Meanwhile, revenue from property tax climbed 12.6 per cent to S$3.4 billion in 9M FY2023, from the year-ago period’s S$3.02 billion, and is expected to swell further in FY2024.  

Second Minister for Finance Chee Hong Tat said in Parliament last week (Feb 6) that revenue from residential property tax is projected to grow by around S$600 million in 2024 – nearly 60 per cent more than the government’s initial estimated increase of S$380 million. He attributed this to higher AVs that rose in tandem with rents for both private and public housing.

For instance, the AVs of most owner-occupied homes grew by more than 20 per cent in 2024, due to the increase in market rentals from 2022 to 2023.

CBRE’s Song noted that the 9M FY2023 figures are based on 2022’s AVs, which should have grown by 20 to 30 per cent, due to private home rents rising close to 30 per cent that year. Property tax rates were also raised in 2023. 

Christine Sun, chief researcher and strategist at OrangeTee Group, added that more condominiums were completed last year, and this may have resulted in more homeowners beginning to pay property taxes.

For the full year, some analysts expect a slight increase in stamp duty collections and a larger jump in property tax takings.

The government had earlier projected stamp duty collections of S$5.75 billion in FY2023. Stamp duty is also expected to account for 0.8 per cent of Singapore’s gross domestic product, compared with 0.9 per cent in FY2022 and 0.8 per cent in FY2019. 

Property tax revenue was projected at S$5.55 billion in FY2023, an increase of 9.6 per cent from FY2022’s S$5.06 billion.  

“It would be interesting to see this time next year, when the numbers for 2024 are published... how much property taxes have skyrocketed,” said Cheong of Savills. 

This is because there has been a “major step up” in the AVs of private residential properties, he said.

“I would think property taxes collected in 2024 would go up by at least 15 per cent, with stamp duties falling by about 5 to 10 per cent. In total, when combined, they would still lead to an increase.”