Make some property curbs permanent

There have been repeated calls to remove certain temporary property cooling measures, especially the Additional Buyer's Stamp Duty (ABSD) and Seller's Stamp Duty (SSD), to allow the property market to regain its liquidity ("Time is hot to remove one cooling measure"; Sept 15 and "Additional Buyer's Stamp Duty 'can be safely removed'"; Sept 12).

Let us consider the merits of keeping these two stamp duties in place.

Property assets, being popular investment assets, are also homes to the majority of us in Singapore.

This requires the issue to be treated with sensitivity, with many foreign jurisdictions similarly imposing additional rules upon their property markets.

The ABSD requires both Singaporean and foreign buyers to pay a premium for investment assets, while exempting true home owners.

Similarly, the SSD prevents unhealthy short-term speculation in the local property market, forcing buyers to take a longer-term view.

Both stamp duties enable the development of a healthy property market, while balancing the social cost of market-driven home prices.

Property investments are significant long-term decisions.

With both sellers and buyers expecting the ABSD and SSD to be removed eventually, they are staying away from the market.

It is not wise to make decisions or take action while a temporary rule is in place. But if both stamp duties are made permanent, it allows both buyers and sellers to make decisions and take relevant action again.

This would be preferable to removing both the ABSD and SSD and allowing the property market to be subjected to the ills that require their implementation again.

Chua Soo Chew

A version of this article appeared in the print edition of The Straits Times on October 29, 2015, with the headline 'Make some property curbs permanent'. Print Edition | Subscribe