Desmond Sim, chief executive officer of real estate consulting firm Edmund Tie, noted that the move will affect “mass market condominium sales” as the median quantum of homes sold in 2022 was “just shy of S$2 million”. “There will be a frenzy at showflats tonight,” Sim said in response to the Budget announcement on Tuesday. “Genuine buyers… looking to buy something at S$2 million may have to re-adjust their budget 1 per cent lower.” Nicholas Mak, head of research and consultancy at ERA Realty, said demand was unlikely to be dampened: “I don’t think a few thousand dollars more will deter people from buying property.” However, OrangeTee’s senior vice-president of research and analytics Christine Sun said there may be some knee-jerk reactions to the changes. “Buyers need time to reassess their finances and observe the market reaction,” she said. “Nevertheless, properties in the upper tier may not see a major impact as wealthy buyers are not likely to be deterred by the extra BSD.” Citing URA data for 2022, Sun said 54.7 per cent of the total private residential transactions were at least S$1.5 million, while 15.4 per cent were at least $3 million. About 39.2 per cent were between S$1.5 million and S$3 million. “Moving forward, about 50 per cent of transactions may be affected by the increased BSD if we use last year’s data as an indication,” she said. The higher BSD may be felt more in the collective sales market, where “en bloc sellers may hold on to their asking prices as they now face higher replacement costs”, said C&W’s Wong. On the other hand, “developers continue to face heightened development risks due to higher construction costs and slightly dampened buyer demand due to higher property costs”, he added. Lee Nai Jia, PropertyGuru’s head of real estate intelligence, data and software solutions, agreed that the BSD hike would “likely cause the en bloc market to soften further”. The way the analysts see it, the changes in BSD are not so much a property measure as they are a tax move. “The increase in residential Buyer’s Stamp Duty acts like a wealth tax for people who can afford higher-value homes,” said Colliers’ He. Huttons’ senior director of research Lee Sze Teck noted that there has been an increase in purchases of luxury residential properties by foreigners in 2022. “This change in stamp duty increases the transaction costs for foreigners but does not discourage them from buying residential properties,” he said. “Similarly, some ultra-high-net-worth individuals have been buying commercial properties. The increase in Buyer’s Stamp Duty will allow the government to capture more tax revenue.” As Tricia Song, head of research, South-east Asia, at CBRE summed up: “On its own, this is unlikely to have a significant impact on the market. However, taking into consideration other earlier wealth taxes and cooling measures for residential properties, as well as higher financing costs for both residential and commercial properties, transaction volumes in both residential and non-residential properties could slow down in the near term. Prices could still be resilient given strong fundamentals of the underlying property sectors.” Minister Wong noted that expenditure projections in the Ministry of Finance’s recently published occasional paper on Singapore’s medium-term fiscal projections have not taken into account additional policy moves that the government may make in the future. According to the paper, government spending may exceed 20 per cent of gross domestic spending by FY2030. “Our efforts to grow the economy, strengthen social safety nets, and enhance national resilience will require the government to spend more,” Wong said. “If there are any such increases in spending, they will need to be funded by additional revenues to ensure a balanced budget for the medium term.” Apart from an increase in the goods and services tax, the government had at Budget 2022 raised the personal income tax rates for top income earners and levied higher taxes on luxury cars. It had also announced it would raise the property tax rates for higher-value owner-occupied residential properties and all non-owner-occupied residential properties in two steps starting this year. The property tax rate for non-owner-occupied residential properties – which includes investment properties – was hiked to 11-27 per cent from Jan 1, 2023, and scheduled to be raised to 12-36 per cent from Jan 1, 2024. This is up from a property tax rate of 10-20 per cent previously. Meanwhile, the property tax for owner-occupied residential properties was raised to 5-23 per cent from 2023 and 6-32 per cent from 2024 for the portion of its annual value in excess of S$30,000. This is up from 4-16 per cent previously. Wong said in the Budget speech last year that the increase would impact the top 7 per cent of owner-occupied residential properties. When fully implemented by 2024, the higher tax rates for both owner-occupied and non-owner-occupied residential properties announced last year are expected to boost Singapore’s property tax revenue by about S$380 million per year.