_Knight Frank Commentary (Revisions to Seller's Stamp Duty)

In a move back to the past, the government reinstated Seller’s Stamp Duty (SSD) to a four-year period with rates bumped by 4 percentage points in the yearly brackets, back to the previous levels prior to March 2017. This is due to the number of subsales (The sale of a unit by one who has signed an agreement to purchase the unit from a developer or a subsequent purchaser before the issuance of the Certificate of Statutory Completion and the Subsidiary Strata Certificates of Title or the Certificates of Title for all the units in the development.) increasing since 2020. From an annual trough of 198 subsales in 2020, the number of subsales has been increasing each year to reach a yearly high of 1,428 by 2024.

The increase in the number of subsales in the past five years was essentially due to timing and the lag effect caused by the COVID-19 outbreak in 2020. The pandemic created severe construction delays as a result of constrains in building and development resources such as labour and materials, thereby pushing back project completion dates. By the time most owners collected the keys to their new homes, three years or more had passed, and they were no longer subject to SSD. In tandem with rising private home prices, it made financial sense for those who had purchased new homes before or at the start of the pandemic to sell for significant gains to other buyers upon completion, especially in 2023 when 19,968 homes (all types including landed) were completed. For subsale buyers in 2024, they would have been presented with the opportunity to obtain homes that are new, ready to move-in or soon-to-be-ready to move in, and at prices that were comparatively less expensive than new launches in showflats circa 2024. The buyers who had acquired subsale units were likely those looking for product that is new and almost complete, without too much need for renovation, given that renovation costs have also increased in the same period.

Another contributing factor to the increase in subsales was the rise in interest rates from 2022, remaining elevated throughout 2023 before easing from the second half of 2024. There might be another group of buyers who had purchased uncompleted homes and were facing the start of high mortgage payments (in contrast to the low interest environment prior to 2022). In the face of such an immediate reality measured against growing economic uncertainty, some might have balked at the prospect of the higher payments and decided to sell. Again, as private home prices had risen substantially between 2020 and 2024, some of these sellers decided that there is no harm taking profit and not have to bear the increased interest costs, especially if they had means of alternative accommodation.

After five years since the pandemic, construction delays are now a thing of the past and supply has caught up to achieve a normalised balance with demand. Construction schedules would also have been and continue to normalise to between three to four years for most projects, and it is probable that the natural course of market dynamics would likely have led to the decline in subsales from sometime in 2025. However, the government is not taking the risk of subsales pushing up prices, even though this might-or-might not happen and has decided to increase the holding period and SSD rates. Though unlikely, should the level of subsales continue to increase in 2025 even after increasing SSD, it would not be too much of a stretch of the imagination to wonder whether the government might even go so far as to consider imposing a Minimum Occupation Period (MOP) in the private home market, similar to that applied to HDB flats.