Home Forums Property News talk How to avoid ABSD ?

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    Different Cooling measures were implemented by the Singapore government since 2009.  How ever, not everyone is happy with the effects of these cooling measures. Some cooling measures give burden to property developers and investors while some benefits the buyers. The government has to observe the pros and cons of those cooling measures.

    Will you think the ABSD (Additional Buyers Stamp Duty)  going to remove ? How we avoid ABSD?

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    test answer

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    In 2Q2017, foreigners accounted for 7.3% of private-home transactions, slightly higher than the 6.5% in 1Q2017, according to JLL’s research. For the whole of 1H2017, the proportion of foreign buyers was 6.9%, which is below the 7.3% recorded in 1H2016 but on a par with the 6.8% in 1H2015. These figures, however, are still below the 8.9% registered in 1H2014.

    In the Core Central Region, which has traditionally been a favourite with foreign buyers, they made up 13.8% of transactions in 1H2017, which is still below the 16.2% in 1H2016. However, the proportion of high-value transactions by foreigners in CCR has increased. According to JLL’s research, in 1H2017, foreign buyers accounted for 20.6% of purchases above $5 million in the CCR, compared with 12.8% in 1H2016. “It shows that more foreigners are zooming in on higher-value transactions, which could be at more attractive price levels compared with the peak of the market in 2013,” notes Ong.

    While foreign participation in the Singapore residential market remains steady, the 15% additional buyer’s stamp duty (ABSD) is still prohibitive from a foreigner’s perspective, says Couse. The total stamp duty amounts to 18% (3% + 15%), and added to the 20% down payment, it means an equity outlay of about 40% on a residential property purchase in Singapore, he points out.

    While the ABSD has been a sufficient deterrent for foreign investors in Singapore, it did not have a similar impact in Hong Kong, notes Couse. Last November, the Hong Kong government doubled the stamp duty for foreigners from 15% to 30%, and increased it from 8% to 15% for local individuals who are not first-time buyers.

    Despite that, Hong Kong’s overall residential property price index rose for the 15th straight month to a record level in June, although at a slower pace. Housing prices have been up 8.5% since January, and were 21.6% higher y-o-y in June, according to the government of Hong Kong’s Rating and Valuation Department.

    The difference in the impact of the property cooling measures is that in Hong Kong, foreign buyers are predominantly mainland Chinese. “They are buying property in Hong Kong for various reasons: portfolio diversification or as a hedge against the renmimbi,” says Couse. “To Chinese investors, Hong Kong is still their own backyard; it’s still one country.” July 1 marked the 20th anniversary of the handover of Hong Kong from the UK to China.

    In Sydney, foreign homebuyers have been hit by an 8% stamp duty since June, double the rate last year. The New South Wales government also introduced a vacancy tax, which is A$5,000 ($5,412) a year for investors who leave their property vacant for more than six months. In Melbourne, the Victoria government has more than doubled stamp duty surcharge for foreign buyers to 7% from July 1. The stamp duty concession for off-the-plan properties has also been removed, which will further increase taxes by about 5%.

    “Many foreign buyers in Australia are mainland Chinese,” says Couse. “And they have strong motivation to buy property in Australia — for their children’s education, emigration and quality of life, among others. It’s more than just a pure investment.”

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