A red-hot property market fuelled a 73.6 per cent surge in stamp duties collected in Singapore’s financial year ended March 2022, although it slipped year-on-year in the first 3 months of 2022.

Stamp duty collections for FY21, which covers the period from April 2021 to March 2022, hit S$6.76 billion, from the S$3.9 billion collected in the corresponding period in FY20. It is also 61.1 per cent higher than the S$4.2 billion in FY19, prior to the start of the pandemic, based on data from the Accountant-General's Department, available online at the Singapore Department of Statistics.

According to Huttons’ senior director of research, Lee Sze Teck, the total number of properties transacted in FY21 amounted to 63,914, 19.9 per cent higher than the year-ago period.

“The increase in stamp duty collected was larger than the increase in transaction volume. This is due to more higher-value transactions in the residential luxury market and Good Class Bungalows (GCBs), an active commercial and industrial investment market and developers acquiring land for development,” said Lee.

For example, commercial buildings such as One George Street was sold for S$1.28 billion, Cross Street Exchange for S$810.8 million and JCube for S$340 million.

In the en bloc market, 25 houses along Thiam Siew Avenue went for S$815 million, Watten Estate Condominium for S$550.8 million and Flynn Park for S$371 million. In the government land sales market, a site along Marina View was sold for S$1.51 billion, Jalan Anak Bukit for S$1.03 billion and Lentor Central for S$784.1 million.

Over in the GCB market, a GCB site on Cluny Road went for S$91 million, Queen Astrid Park for S$86 million and 2 sites at Chatsworth Road for S$78.06 million. In the non-landed luxury segment, Les Maisons Nassim sold 3 units - at S$75 million, S$59.77 million and S$39 million.

Comparing the first 3 months of 2022 against the corresponding period in 2021, stamp duty collections were 4.8 per lower at about S$1.5 billion versus S$1.58 billion.

“Stamp duty collections fell in tandem with property transactions due to seasonal factors and buyers holding back after new cooling measures were rolled out in December 2021,” says Wong Xian Yang, head of research at Cushman & Wakefield. “Developers held back major launches to assess post-cooling measure market conditions.”

Despite the fall in sale volumes, property prices have continued to trend higher in the first quarter of 2022, with private residential and resale HDB prices rising 0.7 per cent and 2.4 per cent quarter on quarter respectively.

“This may have helped mitigate the fall in stamp duty collections,” said Wong.

The government’s total tax revenue for FY21 hit S$74.76 billion, a 21.7 per cent increase from the S$61.41 billion collected in FY20. The FY21 figure is also 10.5 per cent higher than the S$67.65 billion in FY19.

Meanwhile, corporate income tax collection for FY21 reached S$18.2 billion, 12.9 per cent up from S$16.11 billion in FY20 and 8.7 per cent higher than the S$16.73 billion in FY19.

Personal income tax collection for FY21 came to S$14.22 billion, 11.6 per cent up from S$12.75 billion in FY20 and 15 per cent more than the S$12.37 billion in FY19.

Property taxes rose 49.3 per cent to S$4.67 billion in FY21 from a lower base of S$3.13 billion in FY20 - the government had granted qualifying non-residential properties property tax rebate for the period of Jan 1, 2020 to Dec 31, 2020. Compared against the S$4.76 billion collected in FY19, it dipped 1.9 per cent in FY21.

Still, the government’s property tax revenue is set to keep growing in FY22.

Property tax revenue depends on the property tax rate, the number of properties to be taxed and the annual value of each property, and at least 2 of the 3 variables will increase in the next 2 years, notes Nicholas Mak, ERA’s head of research & consultancy.

First, property tax rates will go up in 2 steps - starting from 2023 and again in 2024 - for homes with annual values of more than S$30,000 and all non-owner occupied properties, with the rise being more significant for high-end homes.

Second, the number of properties to be taxed is steadily rising as construction of more HDB flats, private housing, and commercial and industrial properties is completed.

Third, the annual value for residential properties - as appraised by valuers in the Inland Revenue Authority of Singapore based on rental rates - is likely to rise in 2022 and probably 2023.

Meanwhile, although the number of private homes bought by foreigners rose 16.8 per cent from 841 units in FY20 to 982 units in FY21, by proportion of total sales, foreigner purchases dipped marginally from 3.1 per cent in FY20 to 2.9 per cent in FY21, according to OrangeTee’s senior vice-president (research & analytics), Christine Sun.

Despite the easing of border measures, ERA’s Mak does not expect the percentage made up by foreign buyers to increase. “The ABSD (additional buyer’s stamp duty) for non-permanent resident foreigners is too high,” he said.

Moving forward, sales are expected to rebound with more property launches and a brighter economic recovery, said Sun.

“Prices of homes are likely to rise further this year as well. Therefore, the amount collected from stamp duty is likely to increase this year.”

Credit: Business Times