04-07-2025
Higher seller's stamp duty a warning shot to speculators but unlikely to cause market distress
[SINGAPORE] Changes in seller's stamp duty will make it harder to flip a property for profit in a short time, but are unlikely to have much impact on prices or volume in Singapore's residential market, analysts said on Friday (Jul 4).
Nevertheless, the timing of the move was not lost on market players, coming ahead of a third quarter season crowded with new launches. Up to 11 projects with some 5,400 units are slated to be marketed in coming weeks.
The government raised rates for seller's stamp duty by four percentage points to a maximum of 16 per cent and extended the minimum holding period from three to four years, citing a sharp increase in the number of private residential transactions with short holding periods in recent years.
'In particular, there has been a significant increase in the sub-sale of units that have not been completed,' said a statement released late on Thursday night.
A sale transaction is recorded as a sub-sale when a buyer who has purchased a new unit subsequently sells it to another buyer before the property is completed and the Certificate of Statutory Completion (CSC) is issued.
The spike in sub-sales in the past five years was essentially due to a lag effect caused by the Covid-19 outbreak in 2020, said Leonard Tay, Knight Frank Singapore's head of research.
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From a trough of 198 sub-sales in 2020, the lowest annual tally the market has seen since 1996, the number of sub-sales has risen each year to reach a high of 1,428 by 2024, data compiled by Knight Frank showed.
In particular, sub-sale volume jumped in 2023 to 1,294, a 69 per cent increase from the year before. In 2024, volume rose another 10 per cent.
'The pandemic created severe construction delays as a result of constraints 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,' said Tay.
'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.'
Sub-sale volumes hovered around 338 units per quarter between Q1 2023 and Q1 2025, compared to 131 units per quarter between Q1 2013 to Q4 2022, said Tricia Song, CBRE research head for South-east Asia.
'Some owners, who probably did not buy their projects with intention to flip, have sold their properties for significant capital gains as prices have risen 40 per cent since 2020,' Song said.
The heightened interest rate environment between 2022 and 2023 before rates eased from the second half of 2024 may have also contributed to the increase in sub-sales, Tay said.
'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.'
Sub-sale activity has since tapered off, analysts said. Song noted that subsales as a percentage of total private residential transactions have steadily declined, from a 14-year high of 9.5 per cent in Q4 2023, to 4.4 per cent in Q1 2025.
'With property prices stabilising and normalisation of construction timelines, we expect the number of sub-sales to normalise going forward.'
'This measure should not impact the majority of buyers who are genuine owner occupiers or long-term investors,' she added.
Hot projects
Data compiled by The Business Times showed that between January 2019 and July 2025, the five new projects which saw the most sub-sale activity were all suburban condos in the Outside Central Region - Riverfront Residences, Affinity at Serangoon, The Florence Residences, Treasure at Tampines and The Tre Ver.
At Affinity at Serangoon, 334 units were sold in sub-sales, 31.7 per cent of the 1,052 units in the project. The Tre Ver similarly saw 32 per cent of its 729 units sold in sub-sale transactions.
Data crunched by head of research Nicholas Mak shows further that in the recent past, the most profitable sub-sale deals were transactions of prime properties in the Core Central Region.
Between Q3 2020 and Q4 2023, the biggest winners were sellers of four Boulevard 88 units who saw capital gains of S$2.9 million to S$3.9 million, for gross profits of between 27 per cent to 38 per cent. The seller of a bungalow at Botanic @ Cluny Park, meanwhile, made S$2.6 million off their S$9 million exit prices, for a 40 per cent gross gain.
The median gain of a sub-sale for sellers between 2020 and 2025 was S$257,000, Mak found.
In the later period, between Q1 2024 and Q1 2025, the heftiest percentage gain was for a sub-sale at Treasure at Tampines in January 2024. The seller chalked up a gross profit of almost 50 per cent, making a capital gain of S$981,000 with their selling price of just under S$3 million.
Home prices moderating
While the latest increase in SSD took most by surprise, the move was not a knee-jerk reaction but a response to the prolonged increase in volume of sub-sales over several quarters, said Desmond Sim, group chief executive officer of Realion Group which was formed through the merger of OrangeTee and ETC.
PropNex chief executive officer Ismail Gafoor said that the moderation of private home prices recently may temper owners' motivation to sell after a short holding period.
Official flash estimates show overall private residential property prices have risen by a cumulative 1.3 per cent in the first half of 2025, down from 2.3 per cent in the year-ago period.
Fresh cooling measures introduced in 2023, with steep hikes in additional buyer stamp duties (ABSD) for foreign buyers and buyers of second and subsequent properties, have also eroded possible gains from flipping properties.
'Even without this revision (in SSD), higher costs from elevated interest rates and property taxes have already eroded profits and would likely see investors holding on to their properties for longer than three years,' said Marcus Chu, CEO of ERA Singapore.
Mak said: 'With more new residential launches expected in the second half of this year, the government needs a pre-emptive strike to prevent further rise in the number and proportion of sub-sale transactions.'
Christine Sun, chief researcher and strategist of Realion Group, added that more condos are due to obtain their Temporary Occupation Permit. Sub-sale volume might rise in line with the anticipated increase in units securing TOP, from 5,920 units in 2025 to 6,838 units in 2026 and further to 10,306 units in 2027, she said.
