OrangeTee | Comments on budget announcement
Government Policies
The minister announced the 2024 budget on 16 Febuary 2024.
Impact of ABSD concession on single Singaporeans aged 55 and above
16 February 2024 - These changes are designed to help single buyers who are older, including divorcees, widowers, widows, and others. They may want to move to smaller properties since they live with fewer people. The changes may have a limited impact now on the private residential market because this group of buyers is not large. However, this group of buyers may continue to grow with our aging population.
We expect certain market segments to benefit, such as older resale properties. These smaller, older resale properties may have been less attractive in the past because of their shorter balance lease and lower potential for capital appreciation. Moreover, some of these buyers who may have turned to 4-room HDB resale flats as they do not need to observe the mandatory 15-month wait-out period, may now turn to buy smaller, resale condos. This shift in demand could moderate the number of 4-room resale flats sold for a million dollars, which saw a spike last year.
Impact of ABSD changes on developers
Developers are finding it increasingly difficult to sell their entire residential projects in a timely manner due to higher interest rates and cooling measures in place. New home sales have already slowed down in December 2023 and January this year. The market is expected to slow down further amid growing macroeconomic uncertainties and subdued employment prospects. With the new changes, developers now have more time to plan for other marketing activities or explore alternative ways to clear their unsold units.
It is unlikely that this change will have a significant impact as most properties are fully sold by the ABSD timeline. Most developers still prefer to sell out their projects as soon as possible to reduce their holding costs. Nevertheless, this change may still benefit the luxury segment more as they have been hit hardest by the ABSD increases, especially the 60 per cent ABSD for foreign buyers and investors.
Impact of AV changes on homeowners
In the past, most properties had an Annual Value (AV) below S$30,000, which meant that homeowners only paid 4 per cent property tax. However, due to the recent increase in rental prices, many homeowners' AVs have crossed the S$30,000 mark, resulting in higher taxes for them. This has affected many people, especially those who did not benefit from the rental hike and felt that they were being unfairly penalized. Therefore, the changes are considered fair and beneficial for most homeowners, especially those who are not landlords. The adjustment of AV bands for 2025 is also timely because rental prices may not drop soon and may even remain stable for certain areas due to fewer expected completion of condos or residential projects this year
