SINGAPORE, Dec. 7 (Xinhua) -- Singapore government announced hikes of up to 10 percent in stamp duty for private residential property buyers on Wednesday to curb investment demand.
Singaporeans will have to pay an additional stamp duty of 3 percent for their third and subsequent residential properties if they buy it from Dec. 8 onwards, the Ministry of Finance and Ministry of National Development said in a joint statement on Wednesday evening.
The hike came on top of the current stamp duty of 1 percent for the first 180,000 Singapore dollars (140,625 U.S. dollars) value of their property, 2 percent for the next 180,000 Singapore dollars and 3 percent for the remainder.
Buyers given permanent residency in Singapore will have to buy 3 percent additional stamp duty, too, for their second property onwards if they buy it on Dec. 8, 2011 or later.
Foreigners or non-individual buyers will have to pay a 10 percent stamp duty for any residential property they buy. If a foreigner buy a property together with Singapore citizens or permanent residents, the additional stamp duty rate of 10 percent will apply.
"The government has therefore decided to impose the ABSD ( additional buyer's stamp duty) to moderate investment demand for private residential property and promote a more stable and sustainable market," the ministries said in the statement.
It said the demand for private residential property has remained strong despite the economic uncertainties. Prices of private residential properties have continued to rise, albeit more slowly in the last two quarters. They are now 13 percent higher than the peak in the second quarter of 1996 and 16 percent above the more recent high in the second quarter of 2008.
The government said the stamp duty hike is particularly necessary for the foreign buyers "in view of the large pool of external liquidity and strong buying interest from abroad, and the relatively small size of the Singapore market."
Foreigners accounted for 19 percent of all private residential property purchases in the second half of 2011, up from 7 percent in the first half of 2009, it said.
Private residential properties are mainly high-end and accounted for a small part of the residential property market in Singapore, where more than 80 percent of the resident population live in flats built by the Housing and Development Board (HDB).
Only citizens and permanent residents are allowed to buy government-built flats from the government or the resale market.
The government said Singapore first-time buyers and upgraders, and buyers of HDB flats will not be affected by the new measure.
Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said the new measure should help cool investment demand and avoid the prospect of a major destabilizing correction in future.
"We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low," he said.
The government said it will continue to ensure an adequate supply of private housing to meet-medium term demand.
There are 41,000 unsold private housing units in the pipeline, and the government will inject sites in the first half of 2012 that can potentially yield a total of 14,100 units.
It will also expand the supply of executive condominiums in 2012 and is prepared to release sites that can potentially yield 5, 000 such units for the entire year.