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\n15th February to 21st February 2022
\nSingapore has unveiled \u201cmajor enhancements\u201d to its tax regime, which include higher property taxes. The Housing and Development Board (HDB) launched 3,953 flats under the February 2022 Build-to-Order (BTO) exercise, including 398 units in Kallang\/Whampoa under the Prime Location Public Housing (PLH) model.
\n1) Budget 2022: Property tax rates to increase from 2023
\nFinance Minister Lawrence Wong, in his Budget 2022 speech, announced \u201cmajor enhancements\u201d to the city-state\u2019s tax regime, which include imposing higher property taxes that will be rolled out in two phases in the next two years, reported Channel News Asia.
\nThe property tax rate for non-owner occupied residential properties, including investment properties, will be raised from 10% to 20% presently; to 11% to 27% in 2023; and 12% to 36% in 2024.
\nTax rates for owner-occupied residential properties with annual values of over $30,000 will also be increased. The taxation rate currently ranges from 4% to 16% beyond the first $8,000 of a property\u2019s annual value. By 2023, the taxation range will stand at 5% to 23% beyond the first $30,000 valuation and at 6% to 32% in 2024.
\nOnce fully implemented, the changes to the property tax will raise the city-state\u2019s property tax revenue by around $380 million per year.
\nDr. Tan Tee Khoon, Country Manager, PropertyGuru Singapore, noted that individuals who belong to the wealthier demographic will be impacted the most by the increased property tax rates for non-owner occupied residential properties, as taxes get progressively heavier with the increase in the annual value of such properties.
\n\u201cThe average Singaporean homeowner who owns\u00a0a\u00a0single\u00a0property which they live in\u00a0is unaffected by these changes. However, those who own luxury homes and\/or multiple properties will definitely feel the pinch.
\nThe example cited is telling. Private property prices and rentals (which affect annual values) have risen significantly in the past year, and as Minister Wong said, a large non-owner-occupied detached house with an annual value of $150,000 will see a property tax bill of $43,000 per year. Coming so soon after the Additional Buyer\u2019s Stamp Duty (ABSD) hike announced in December, this is another large blow to property investors.
\nA possible impact on the market is an increase in rents if property owners try to pass on the additional costs to the tenants, but this will only affect a niche group of landlords owning properties with rents above $10,000 per month. The sales of luxury properties are unlikely to be affected as these tend to be purchased as trophy assets whereby the buyers are more focused on capital appreciation than just rental yield.\u201d
\n2) HDB launches 3,953 flats, including Kallang\/Whampoa project under prime location model
\nKing George\u2019s Heights, the Feb 2022 Kallang\/Whampoa project, has an estimated waiting time of 59 months. Source: HDB
\nThe Housing and Development Board (HDB) has launched 3,953 flats under the HDB BTO February 2022 exercise, including 398 units in Kallang\/Whampoa under the\u00a0PLH model.
\nThe flats are spread across four HDB estates in Geylang, Tengah, Kallang\/Whampoa and Yishun.
\nThe second project to be launched under the\u00a0PLH model, King George\u2019s Heights in Kallang\/Whampoa is expected to attract strong demand due to its lower median pricing compared to nearby BTO flats, reported The Business Times.
\nOrange Tee & Tie\u2019s Senior Vice-President of Research and Analytics Christine Sun noted that Kallang\/Whampoa four-room flats at King George\u2019s Heights are priced from $488,000 to $675,000, with median prices at $581,500. Comparatively, four-room flats at Kempas Residences from the May 2019 Kallang\/Whampoa HDB BTO exercise were sold from $562,000 to $674,000 in 2019, or median prices at $618,000.
\nSun said the lower pricing may be to compensate for the longer Minimum Occupation Period (MOP) since PLH flats are subject to a 10-year MOP as well as stringent selling and buying restrictions.
\nAs expected, there is much interest in\u00a0King George\u2019s Heights, the Kallang\/Whampoa Feb 2022 BTO launch. However, the Dakota Crest Geylang Feb 2022 BTO project is\u00a0likely to come out as the\u00a0popular launch of this exercise.
\nAs of 22 February 2022, 11am, the overall application rate for 3-room and 4-room flats for Dakota Crest is\u00a07.6 and 21.8; and for King George\u2019s Heights, the overall application rate for 3-room and 4-room flats is\u00a04.8 and 13.8.
\n3) New private home sales up in January despite fewer launches
\nDespite fewer launches, Singapore saw new private home sales, excluding executive condominiums (ECs), increase 3.5% month-on-month to 673 units in January, reported Channel News Asia citing Urban Redevelopment Authority (URA) data.
\nLee Sze Teck, Senior Director for Research at Huttons Asia, noted that only two projects were launched last month \u2013 Ikigai and Belgravia Ace.
\nIncluding ECs, new home sales grew 0.8% to 725 units in January, from the previous month\u2019s 719 units, said OrangeTee & Tie\u2019s Senior Vice President of Research and Analytics Christine Sun.
\nOn an annual basis, new home sales, excluding ECs, plunged 58% from the 1,600 units shifted in January 2021.\u00a0Lee shared that most of the buyers were first-time buyers, who were unaffected by the cooling measures.
\nA\u00a0large number of BTO projects will fulfil their 5-year MOP\u00a0period in 2022 and 2023. In turn, an influx of HDB upgraders\u00a0can be expected. These HDB upgraders tend to buy larger HDB flats or\u00a0new launch entry-level condos for own-stay, sustaining demand for non-landed private property.
\n4) Ardmore Park unit is most profitable resale transaction in Q4 2021
\nArdmore Park is a freehold condominium project in District 10, which received its TOP in 2001.
\nThe 23rd floor unit at luxury condominium project Ardmore Park emerged as the most profitable resale transaction in Q4 2021 as the seller pocketed a sizeable profit of $6.725 million, reported The Business Times.
\nSpanning 2,885 sq ft, the freehold condominium was sold for $11 million in November last year, way higher compared to the $4.275 million paid for the unit back in 1999. Edmund Tie Research data showed that the selling price worked out to an annualised profit of 4.3%.
\nMeanwhile, a 1,604 sq ft unit at People\u2019s Park Complex was the leading profit-making transaction by percentage as it was sold for $1.35 million in November, significantly higher than the $350,000 paid by the seller in 2006. The price worked out to an annualised profit of 9.3% and a total profit of around 286%.
\n\u201cIn general, a long holding period, coupled with favourable entry and exit points in the market cycle, remain the key drivers (of) transaction profitability,\u201d said Lam Chern Woon, Senior Director for Research and Consulting at Edmund Tie.
\nRelated article:\u00a0Is the Yong An Park Unit Worth its 12.5 Million Price Tag: the Most Profitable Deal in Singapore\u2019s Q3 2021 Resale Market
\n5) Singapore\u2019s young super-rich driving up GCB prices
\nDespite the COVID-19 pandemic, Knight Frank data showed that the number of Good Class Bungalows (GCBs) sold in 2021 tripled to 60 from 2019, with the young super-rich driving up prices.
\nBloomberg reported that Singapore\u2019s younger generation of super-wealthy made their money in not-so-traditional areas and include e-commerce executives, startup founders and people who made their riches in crypto.
\nRelated article:\u00a0Who Are Buying Good Class Bungalows (GCBs) in Singapore? (2021)
\nFor these young buyers, bungalows are their way of announcing that they have arrived, instead of a method to preserve wealth, said Alan Cheong, Savills Singapore\u2019s Executive Director of Research.
\nKnight Frank revealed that the average cost of GCBs increased by almost a quarter since 2019 to $1,725 per sq ft in 2021.
\nIn fact, a GCB plot at Nassim Road now cost $85 million, said Singapore Realtors\u2019 Co-Founder and Managing Partner Bruce Lye. This is significantly higher than the $38.8 million selling price of GCBs there in 2019.
\nDemand for GCBs is likely to remain strong due to three factors. One, most purchase GCBs to live in them. Two, there is limited GCB supply. Three, the prices of GCBs is likely to\u00a0grow. Hence, those who are in the market to buy a GCB will make a move to purchase if they find a suitable property.
\n6) Property agent commission unlikely to increase<\/p>\n