CBRE commentary on property-related measures in Budget 2024

By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE

Singapore announced its Budget 2024 on 16 February 2024. Titled “Building Our Shared Future Together”, it sets out the Government’s plans to help citizens meet their full potential, while keeping Singaporeans assured despite a more troubled world. Among measures addressing higher costs of living, sustainability, skills building support for workers, and tax policies, CBRE highlights the key ones that have an impact on the Singapore property market.  

1. ABSD Remission Clawback for housing developers
Before 16 Feb 2024, housing developers were granted an ABSD remission if they sell all units in their development within a 5-year timeline. Should they be unable to do so, they would be subject to an ABSD clawback rate amounting to 25-35% of the land purchase price with interest.
Under Budget 2024, from 16 Feb 2024 the ABSD clawback rate would be lowered in reductions of 1% for each addition % of total units sold above 90% once developers sell at least 90% of a development within the prescribed sale timeline. This reduction in clawback rate is capped at 10% for a project which sells 99% of total units and will ensure that housing supply continues to be released promptly while also providing developers some flexibility. 

CBRE comments:
Table 1: Revised ABSD remission clawback for residential projects

Proportion of Units Sold (%)	Projects with residential land acquired between Jul 6, 2018 and Dec 15, 2021, subject to 30% ABSD with upfront 25% remission		Projects with residential land acquired on or after Dec 16, 2021, subject to 40% ABSD with upfront 35% remission
(Rounded down to nearest whole %)	ABSD Remission Clawback Applicable before Feb 16, 2024 (%)	ABSD Remission Clawback Applicable on or after Feb 16, 2024 (%)	ABSD Remission Clawback Applicable before Feb 16, 2024 (%)	ABSD Remission Clawback Applicable on or after Feb 16, 2024 (%)
100	0	0	0	0
99	25	15	35	25
98	25	16	35	26
97	25	17	35	27
96	25	18	35	28
95	25	19	35	29
94	25	20	35	30
93	25	21	35	31
92	25	22	35	32
91	25	23	35	33
90	25	24	35	34
<90	25	25	35	35

Source: MND

2. Property tax changes for owner-occupied properties
According to Deputy Prime Minister Lawrence Wong, “In Budget 2022, a two-step increase in property tax rates for homes was announced, which was meant to impact mainly the top 7% of owner-occupied residential properties. However, rents increased significantly from 2022, leading to a sharp rise in annual values (AVs) and affected 13% of owner-occupied properties as a result.”
Under Budget 2024, all AV bands of owner-occupied residential property tax rates will be raised from 2025. IRAS will also offer a 24-month interest free instalment plan to retirees living in higher-end residential homes who face cash flow issues when paying their property tax bills.

Table 2: Revised AV bands for owner-occupied properties

Property tax rate	Current AV band	Revised AV band from 1 Jan 2025
0%	First $8,000	First $12,000
4%	>$8,000 to $30,000	>$12,000 to $40,000
6%	>$30,000 to $40,000	>$40,000 to $50,000
10%	>$40,000 to $55,000	>$50,000 to $75,000
14%	>$55,000 to $70,000	>$75,000 to $85,000
20%	>$70,000 to $85,000	>$85,000 to $100,000
26%	>$85,000 to $100,000	>$100,000 to $140,000
32%	>$100,000	>$140,000

These changes come following an increase in property taxes implemented under Budget 2022. Rentals have risen sharply since, with the URA Rental Index for all private residential properties seeing a 35.3% surge (Q1 2022 – Q4 2023), leading to resultant increases in AVs and impacting a larger proportion of homeowners than originally intended.

CBRE comments: 
 Example 1: Percentage difference in property tax payable for properties of various AVs

Annual Value ($)	Property Tax Payable Effective 1 Jan 2024	Property Tax Payable Effective 1 Jan 2025	Difference in Amount	% Difference
12,000	160	0	-160	-100%
15,000	280	120	-160	-57%
20,000	480	320	-160	-33%
25,000	680	520	-160	-24%
30,000	880	720	-160	-18%
40,000	1,480	1,120	-360	-24%
50,000	2,480	1,720	-760	-31%
75,000	6,080	4,220	-1,860	-31%
100,000	11,980	8,620	-3,360	-28%
125,000	19,980	15,120	-4,860	-24%
150,000	27,980	22,220	-5,760	-21%
700,000	203,980	198,220	-5,760	-3%

• For residential properties with AV of $8,000-$12,000, property tax payable from 1 Jan 2025 will be zero, versus up to $160 in 2024. 
• For residential properties with AV of $12,001-$30,000, property tax payable from 1 Jan 2025 will decrease by $160, which will be a reduction of 18-99.9% from 2024’s tax levels. 
• For residential properties with AV of $50,000, property tax payable from 1 Jan 2025 will decrease by 31%, compared to current property tax payable.
• For residential properties with AV of $100,000, property tax payable from 1 Jan 2025 will decrease by 28%, compared to current property tax payable.
• For residential properties with AV of $150,000, property tax payable from 1 Jan 2025 will decrease by 21%, compared to current property tax payable.

In general, public housing have lower AVs of below $20,000 and thus will see the largest savings. However, bearing in mind there was a one-off property tax rebate of up to 100% by property types for all owner-occupied residential properties in 2024, the actual savings will differ. For some cases, the property tax bill may even increase in 2025, assuming AVs are unchanged. 

Table: 2024 Property Tax Rebates for Owner-Occupied Residential Properties

1 & 2-room flat	3-room flat	4-room flat	5-room flat	Executive HDB	Private property
100%	70%	50%	40%	30%	15%; capped at $1,000

Source: IRAS

For private homes, the revision of the AV bands is expected to benefit owner-occupiers of mid-tier properties with AVs of $50,000 - $100,000 the most, with a reduction of $760-3,360 or savings of 28-31% of their 2024 tax bill. For properties with AVs of $140,000 and above, the difference in tax payable remains at $5,760, which will be increasingly insignificant for higher AVs, which underscores the spirit of this “wealth tax”.  

Previously, those living in higher value properties who have no or lower income may have considered downgrading. With the revised AV bands, coupled with the 24-month interest free instalment plan to retirees, owners may be able to pay the property taxes and hold firm to their current property. 

3. New ABSD Concession for Single SC Seniors
• Today, buyers of HDB flats and new Executive Condominium units are not required to pay ABSD, if any of the joint acquirers or purchasers is an Singapore Citizen (SC), as current regulations require them to dispose of their first property within 6 months of legal possession of their new flat.
• An ABSD concession is accorded to married couples with at least one SC spouse, who jointly purchase a replacement private residential property. Under the concession, the couple can apply for a refund of ABSD, subject to conditions which include selling their first residential property within 6 months after (a) the date of purchase of the replacement unit if it is a completed residential property, or (b) the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the replacement property, whichever is earlier, if the replacement residential unit is not completed at the time of purchase. 
• To better support single seniors who wish to right-size their residential property, the Government will extend the ABSD concession to single SCs aged 55 and above, for purchases on or after 16 Feb 2024. They will be able to claim a refund of ABSD paid on their lower-value replacement private residential property, if they sell their first residential property within 6 months after the:(a)  Date of purchase of a replacement residential property, if it is a completed unit; or (b)  Issue date of the TOP or CSC of the replacement residential property, whichever is earlier, if the replacement unit is not completed at the time of purchase.

CBRE comments: 
This should enable single seniors to monetise and right-size their residential properties without having to sell and rent first or subject to a permanent 20% ABSD. However, this would still require them to pay the ABSD of the second property upfront before seeking a refund after they sell their first residential property within 6 months. Given their age, it may still be difficult for them to obtain financing to afford a second property without first selling the original property. We thus expect the market impact to be minimal. Regardless, this flexibility may encourage more larger properties to made available by single seniors (especially empty nesters) and create more liquidity in the secondary market.  This could also boost smaller-unit private home sales in the market.
 
Read the MND press release here.
For more information on property tax rates and sample calculations, click here.