reporter2
26-05-22, 11:12
Property tax hikes won’t depress new launch prices, may hurt luxe home demand: NUS poll
May 26, 2022
REAL estate honchos generally do not anticipate price cuts for new private home launches as a result of Singapore’s upcoming property tax increases, though some developers may try to buy more land in the suburbs, according to a quarterly survey.
The poll findings also indicate that the tax hikes are likely to slow demand for luxury condominiums and landed properties, especially those in prime locations.
For its Q1 2022 survey, the National University of Singapore Real Estate (NUS+RE) sought the views of 39 senior executives in Singapore’s real estate industry, including developers, on the impact of the tax hikes on the private residential market. NUS+RE represents the Institute of Real Estate and Urban Studies (IREUS) and the Department of Real Estate.
IREUS deputy director Lee Nai Jia told The Business Times that the higher property tax rates are unlikely to affect upgraders’ aspirations of owning a private home, while the high-income homeowners are more likely to feel the pinch.
“That said, the supply of high-end properties is inelastic, and prices are unlikely to budge correspondingly,” he noted.
This February, Finance Minister Lawrence Wong announced in his Budget 2022 speech that the property tax rates for both non-owner occupied and owner-occupied residential properties will go up in 2 steps, starting from 2023.
Despite the impending hikes, about 85 per cent of the executives surveyed expect housing developers to go ahead with their project launches as planned, and nearly half reckon that the prices at new launches will be kept the same.
However, the higher property tax rates may prompt developers to shift their land acquisition strategies, such as by acquiring more sites in the suburbs or outside central region (OCR) and lowering their price expectations for land bids, respondents said.
https://i.imgur.com/EcmsVJx.png
Dr Lee pointed out that property launches are likely to proceed as planned, in spite of the new measures, as developers remain subject to the 5-year additional buyer’s stamp duty deadline.
“However, the competition for OCR sites should heat up, as the demand there is likely to be buttressed by strong upgrader demand,” he added.
By market segment, the higher tax rates are unlikely to significantly affect demand for executive condominiums (ECs) and mass-market condominiums, based on the majority of the survey responses.
For ECs, which are a public-private housing hybrid, about 46.2 per cent of the property executives expect no impact on demand while another 46.2 per cent reckon the impact will be limited.
Slightly more than half of the respondents foresee a limited impact on demand for mass-market condominiums, and 38.5 per cent think there will not be any impact.
Only a minority of them indicated that the new property tax rates will permanently hit the EC and mass-market condominium segments.
https://i.imgur.com/XUT3vDm.png
In contrast, a bigger proportion of the executives anticipate a permanent dip in demand for high-end condominiums (41 per cent) and landed homes (38.5 per cent).
That said, more than half indicated that there will only be a limited impact on demand for both the landed and the luxury non-landed segments.
When it comes to land purchases, the higher property taxes may have just a limited impact on en bloc acquisitions and on government land sales sites, with some 51.3 per cent and 56.4 per cent of the respondents, respectively, selecting this option.
Fewer than a quarter of them stated that the tax hikes will have any permanent effect on land acquisitions.
By region, demand for private homes in Singapore’s prime areas or core central region (CCR) could permanently fall as a result of the higher property tax rates, according to more than half of the senior executives.
On the other hand, most of them think the impact will likely be limited for private residential properties located in the city fringe or rest of central region (RCR) and in the OCR. Fewer than a quarter of the respondents anticipate a permanent dent in demand in the RCR and OCR.
https://i.imgur.com/FBpixC2.png
The property tax rate for non-owner occupied residential properties, including investment properties, will increase to 11-27 per cent from Jan 1, 2023, and then to 12-36 per cent from Jan 1, 2024. This is up from 10-20 per cent presently. High-end properties will see a steeper increase.
For owner-occupied homes, the rate will rise for the portion of the annual value in excess of S$30,000, to 5-23 per cent from 2023 and 6-32 per cent from 2024, from the current 4-16 per cent.
https://www.businesstimes.com.sg/real-estate/property-tax-hikes-wont-depress-new-launch-prices-may-hurt-luxe-home-demand-nus-poll
May 26, 2022
REAL estate honchos generally do not anticipate price cuts for new private home launches as a result of Singapore’s upcoming property tax increases, though some developers may try to buy more land in the suburbs, according to a quarterly survey.
The poll findings also indicate that the tax hikes are likely to slow demand for luxury condominiums and landed properties, especially those in prime locations.
For its Q1 2022 survey, the National University of Singapore Real Estate (NUS+RE) sought the views of 39 senior executives in Singapore’s real estate industry, including developers, on the impact of the tax hikes on the private residential market. NUS+RE represents the Institute of Real Estate and Urban Studies (IREUS) and the Department of Real Estate.
IREUS deputy director Lee Nai Jia told The Business Times that the higher property tax rates are unlikely to affect upgraders’ aspirations of owning a private home, while the high-income homeowners are more likely to feel the pinch.
“That said, the supply of high-end properties is inelastic, and prices are unlikely to budge correspondingly,” he noted.
This February, Finance Minister Lawrence Wong announced in his Budget 2022 speech that the property tax rates for both non-owner occupied and owner-occupied residential properties will go up in 2 steps, starting from 2023.
Despite the impending hikes, about 85 per cent of the executives surveyed expect housing developers to go ahead with their project launches as planned, and nearly half reckon that the prices at new launches will be kept the same.
However, the higher property tax rates may prompt developers to shift their land acquisition strategies, such as by acquiring more sites in the suburbs or outside central region (OCR) and lowering their price expectations for land bids, respondents said.
https://i.imgur.com/EcmsVJx.png
Dr Lee pointed out that property launches are likely to proceed as planned, in spite of the new measures, as developers remain subject to the 5-year additional buyer’s stamp duty deadline.
“However, the competition for OCR sites should heat up, as the demand there is likely to be buttressed by strong upgrader demand,” he added.
By market segment, the higher tax rates are unlikely to significantly affect demand for executive condominiums (ECs) and mass-market condominiums, based on the majority of the survey responses.
For ECs, which are a public-private housing hybrid, about 46.2 per cent of the property executives expect no impact on demand while another 46.2 per cent reckon the impact will be limited.
Slightly more than half of the respondents foresee a limited impact on demand for mass-market condominiums, and 38.5 per cent think there will not be any impact.
Only a minority of them indicated that the new property tax rates will permanently hit the EC and mass-market condominium segments.
https://i.imgur.com/XUT3vDm.png
In contrast, a bigger proportion of the executives anticipate a permanent dip in demand for high-end condominiums (41 per cent) and landed homes (38.5 per cent).
That said, more than half indicated that there will only be a limited impact on demand for both the landed and the luxury non-landed segments.
When it comes to land purchases, the higher property taxes may have just a limited impact on en bloc acquisitions and on government land sales sites, with some 51.3 per cent and 56.4 per cent of the respondents, respectively, selecting this option.
Fewer than a quarter of them stated that the tax hikes will have any permanent effect on land acquisitions.
By region, demand for private homes in Singapore’s prime areas or core central region (CCR) could permanently fall as a result of the higher property tax rates, according to more than half of the senior executives.
On the other hand, most of them think the impact will likely be limited for private residential properties located in the city fringe or rest of central region (RCR) and in the OCR. Fewer than a quarter of the respondents anticipate a permanent dent in demand in the RCR and OCR.
https://i.imgur.com/FBpixC2.png
The property tax rate for non-owner occupied residential properties, including investment properties, will increase to 11-27 per cent from Jan 1, 2023, and then to 12-36 per cent from Jan 1, 2024. This is up from 10-20 per cent presently. High-end properties will see a steeper increase.
For owner-occupied homes, the rate will rise for the portion of the annual value in excess of S$30,000, to 5-23 per cent from 2023 and 6-32 per cent from 2024, from the current 4-16 per cent.
https://www.businesstimes.com.sg/real-estate/property-tax-hikes-wont-depress-new-launch-prices-may-hurt-luxe-home-demand-nus-poll