By Nikki De Guzman:
The latest property tax hikes for Singapore’s luxury homes has drawn mixed reactions from analysts with some saying it is unlikely to turn investors away, reported the news portal World Property Channel.
“If we look at it in absolute quantum, in thousands of dollars, the increase is only a few thousands of dollars,” said Nicholas Mak, Research Head at SLP International.
“And I think if the person is able to spend a few million dollars on a high-end luxury property, I believe they can well afford this increase in property tax,” he added.
The government unveiled the new property tax structure, which could see a rise of up to 20 percent depending on the use and type of property, just a few days after Hong Kong announced similar measures.
“From a progressive tax view point, it’s to be expected and probably quite fair,” said Tan Su Shan, DBS’ Private Banking Head.
“From a developers’ point of view, it’s yet another pill to swallow.”
However, a number of analysts see the new tax increase as a game-changer. Leonard Ong, tax partner at KPMG Singapore, expects landlords to pass the costs “on to tenants in the form of increased rents” while some may turn to commercial properties instead.
“This will drive up the cost of commercial properties and overall business costs,” added Ong.
Property consultancy Knight Frank noted that home prices in Singapore jumped 50.5 percent from Q4 2006 to the end of 2011. Notably, there was a 33 percent increase in home prices during 2007 alone.
“The property tax is a wealth tax and is applied irrespective of whether lived in, vacant or rented out," stated Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam in his recent budget speech.
He added: “Those who live in the most expensive homes should pay more property tax than others.”
Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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