Developers cut prices as ABSD deadline looms

Condominiums in Singapore. Photo: Cheryl Marie Tay

Singapore developers are starting to slash condo prices as the deadline for the Additional Buyers Stamp Duty (ABSD) looms, reported The Straits Times.

Under the ABSD rules, developers are given five years within which to complete a housing project and sell all units. Otherwise, they must pay the ABSD, which was initially set at 10 percent of the sites purchase price, and subsequently raised to 15 percent on 12 January 2013.

Since it was first introduced on 8 December 2011, the first deadline comes up at the end of this year.

As such, projects such as The Trillinq, which is believed to be the first site to come under the ABSD rules, saw median prices drop to $1,329 psf in Q4 2015, from $1,545 psf in Q1 2013 during the projects launch. The 755-unit project has sold 220 units as at end-2015.

Over at Mon Jervois, which is set to incur ABSD from early-2017, median prices for units stood at $1,852 psf in Q4 2015, down from $2,087 psf in Q2 2013. As at end-2015, the project moved 46 out of the 109 units.

Also poised to incur ABSD from early next year is Kingsford@Hillview Peak. The project sold 242 of 512 units as at end-2015, with median prices falling from $1,340 psf in Q2 2013 to $1,288 psf in Q4 last year.

Another source of pressure for developers is the Qualifying Certificate (QC) rules.

Under these rules, non-Singaporean developers should finish building a housing project in five years of acquiring the site and sell all the units in two years from the date of completion. Developers looking for more time on either deadline can pay extension charges. But unlike the ABSD, the amount is pro-rated for QC based on the number of unsold units.

As the ABSD charges will kick in first, developers are now given a shorter timeline to clear the units if they want to avoid the hefty fine, said Cushman & Wakefield Research Director Christine Li.

She noted that ABSD charges will still apply even if developers only have one unsold unit. This is in stark contrast with QC extension charges, which are more progressive, especially in the first year.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg

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