Singapore’s residential property market, if hypothetically reshaped by the complete removal of Additional Buyer’s Stamp Duty (ABSD), would likely experience a pronounced reconfiguration of capital flows, pricing dynamics, and buyer profiles. The current regime of a 60% levy on foreign purchasers and 20% on many local upgraders is specifically calibrated to moderate demand and temper speculative activity. This stands in contrast to the government’s current use of increased ABSD rates as a tool to maintain long‑term market stability and affordability.
In such a scenario, the dismantling of this tax architecture would remove a deliberately constructed frictional cost, transforming both the depth and composition of demand across the private housing spectrum. Foreign investment flows, presently constrained by the 60% surcharge, would face no comparable fiscal deterrent, and the deterrent effect intentionally designed to curb non-resident participation would effectively vanish. Given that Singapore remains an attractive cross-border investment destination even under elevated tax conditions, this suggests that significant latent demand exists. The removal of this key demand‑side cooling measure would also eliminate a policy tool that has been empirically shown to moderate housing prices over time.
The elimination of ABSD could liberate substantial incremental capital inflows. Transaction volumes would plausibly rise as international buyers re-enter segments previously rendered uneconomic, intensifying competition for limited stock. Historical episodes of ABSD tightening have shown a clear dampening effect on foreign demand that would, in this counterfactual, be unbound.
Price formation mechanisms would correspondingly shift, as the 2.5% post-April 2023 price increase, observed despite a more punitive ABSD schedule, indicates that the tax currently exerts a moderating influence on appreciation trajectories. Without this constraint, price growth could accelerate, particularly in supply-constrained submarkets where foreign capital traditionally concentrates. Divergent pressure profiles would likely emerge between landed and non-landed private homes, as global investors, typically more active in prime and higher-value assets, bid up specific districts. Analysts currently forecast moderate property price increases of 3-7% for 2025 under the existing regulatory framework.
Meanwhile, citizens seeking owner-occupation would experience stronger affordability headwinds. Local buyers, especially HDB upgraders currently subject to a 20% ABSD when purchasing private property before disposal of existing units, would see their transactional cost structures materially altered.
Entry into the private segment would become fiscally less onerous, making second and third property acquisitions more financially feasible. Middle-income households transitioning from public to private housing would encounter fewer statutory cost impediments, even as intensified investor activity heightens competitive pressures.
In parallel, speculation dynamics would likely become more pronounced. The present ABSD framework functions as a structural brake on multiple-property accumulation and short-term trading.
Without it, both foreign and domestic investors would face fewer disincentives to pursue yield-driven or momentum-based strategies. Transaction velocity could increase as opportunistic capital responds more rapidly to market signals.
Property flipping or short-horizon holding strategies would regain economic attractiveness, potentially amplifying price volatility and decoupling segments of the residential market from underlying owner-occupier fundamentals.
