Demand for high-end segment remains resilient despite higher ABSD

By
/ EdgeProp
|
September 24, 2018 8:00 AM SGT
On July 5, the government has acted to cool the red hot residential property market by introducing a fresh round of cooling measures, which included higher Additional Buyer’s Stamp Duty (ABSD) rates and tighter Loan-to-Value (LTV) limits.
With the new cooling measures, Singaporeans buying their second property will now have to pay 12% ABSD from the previous 7%. Singapore PRs will now have to pay an ABSD of 15%, from the previous 10%, when they purchase a second residential property, while foreigners buying residential property will have now have to pay 20% ABSD from the previous 15%.
The cooling measures also introduced tighter loan-to-value limits, a move that hit first-time homebuyers the hardest, primarily because the loan-to-value limit has been slashed to 75% from 80%.
This is reflected in the significant decline in new home sales in August, which fell 64.3% from the previous month, and 50.6% compared to a year ago.
However, demand for high-end properties in the Core Central Region (CCR) has demonstrated resilience despite the property cooling measures.
Resilience in the prime districts
In late August, the private preview of the freehold 8 St Thomas, located off River Valley Road sold over 20 units at an average price of over $3,000 psf.
About 85% of the sales were reportedly for one- and two-bedders, with prices starting at $1.42 million for a 441 sq ft one-bedder; $1.76 million for a 549 sq ft two-bedroom unit. About 70% of the buyers are locals, with the rest are mostly foreigners from Hong Kong.
“The sales demonstrate a resilience at the top end of the market in the CCR,” says Ong Choon Fah, CEO of Edmund Tie & Co (ET&Co).
Ong adds that the same situation is seen at other luxury condos such as...