Forum: ABSD the right tool to control property prices

Housing seen in the central area of Singapore.
Housing seen in the central area of Singapore.ST PHOTO: KUA CHEE SIONG

I do not agree with City Developments' Sherman Kwek when he says the additional buyer's stamp duty (ABSD) policy for developers is responsible for rising housing prices (Tweaking ABSD timeline and pro-rating penalties can help contain rising housing prices, Dec 17).

He says developers prefer to sell at a lower price to have a comfortable sell-out.

But developers will sell at the highest price they think the market can bear and maximise profits, irrespective of the land cost.

He also asserts that the five-year ABSD timeline creates a cycle such that developers have to replenish their land bank at the same time, causing prices to rise.

There is nothing to stop developers from lowering their sale prices today, taking a lower profit and achieving an earlier sell-out rather than waiting five years till just before the ABSD is imposed to do so.

This will let them make new land purchases when bidding is less competitive.

Finally, he appeals for the ABSD to be pro-rated to the number of unsold units.

Applying it to only the number of unsold units will result in insignificant penalties easily absorbed by developers and will not change their behaviour.

The Government is right in instituting the cooling measures, which it should not change even in the face of a property glut or economic slowdown.

This will reduce uncertainty for property developers and purchasers, which will benefit both parties in the long run.

Jeremy Teo Chin Ghee (Dr)

A version of this article appeared in the print edition of The Straits Times on December 19, 2019, with the headline 'ABSD the right tool to control property prices'. Subscribe