Budget 2022: Property tax rates for homes to rise from 2023, analysts don’t expect demand to dampen

February 18, 2022

BT 20220218 Property Tax Rates

Property taxes rates for both owner-occupied and non-owner-occupied residential properties will be revised in 2 steps starting from 2023

Property taxes rates for both owner-occupied and non-owner-occupied residential properties will go up in 2 steps starting from 2023, but analysts do not expect this to dent demand for homes.

The property tax rate for non-owner-occupied residential properties – which includes investment properties – will be hiked across the board: from 10-20 per cent presently, to 11-27 per cent from Jan 1, 2023 and 12-36 per cent from Jan 1, 2024.

High-end properties will see a steeper increase. For instance, the annual property tax payable for a suburban condominium or landed property with an annual value (AV) of S$30,000 will go up from S$3,000 under the current rates to S$3,300 in 2023 and S$3,600 in 2024.


The annual property tax for a large landed property with an AV of S$150,000 will increase from S$24,000 currently, to S$33,150 in 2023, and S$43,200 in 2024.

Meanwhile, the property tax for owner-occupied residential properties will go up for the portion of AV in excess of S$30,000: from 4-16 per cent today, to 5-23 per cent from 2023 and 6-32 per cent from 2024. “This increase will impact the top 7 per cent of owner-occupied residential properties,” said Finance Minister Lawrence Wong during the Budget speech.

The increase will similarly be higher for properties at the top end. For instance, a condo in a central location or a landed property with an AV of S$40,000 will pay a property tax of S$1,380 in 2023 and S$1,480 in 2024. This is up from S$1,280 under the current rates. A large landed property with an AV of S$150,000 will pay a property tax of S$20,230 in 2023 and S$27,980 in 2024. This is up from S$12,580 currently.

“When fully implemented, they will raise our property tax revenue by about S$380 million per year,” Wong added.

While an increase in property tax does increase holding costs for property, it is unlikely to dampen demand as the increase in costs seem manageable, highlighted Wong Xian Yang, head of research at Cushman & Wakefield.

Citing figures from IRAS, Wong noted that the median AV of non-landed private properties (including executive condos) and landed properties was S$22,200 and S$34,800 respectively in 2020. “Assuming an investment property with an annual value of S$22,200, the increase in tax would only come up to S$444,” he calculated.

Nicholas Mak, head of research and consultancy at ERA, said: “Most of the increase in property taxes will fall on the more expensive properties with higher AVs. These residential properties are usually high-end properties in the Core Central Region that are owned by the wealthy, who can easily afford the increase.”

Chief of real estate consultancy Delasa, Karamjit Singh, pointed out that investments into homes are not driven solely by yields, but more by emotional, utility and capital preservation needs. As such, “the increases are not expected to change buying behaviour or dampen prices of premium homes,” Singh added. “The impact of the higher taxes are also somewhat mitigated by risen values and rents, especially in the case of landed properties.”

Similarly, Knight Frank’s head of research, Leonard Tay, does not expect the bump in the property tax rate to detract owner-occupiers from their upgrading aspirations.

Meanwhile, Ismail Gafoor, chief of PropNex Realty, reckons that some residential landlords of investment properties could hike rents to help offset the higher tax payable. “Some investors who own multiple properties may perhaps explore investing in commercial properties, which have a flat property tax rate of 10 per cent,” he added.

The reduced net rental yield for residential properties, arising from the revised property tax, also means that investors would need to rely more heavily on capital appreciation when they invest in real estate, Mak reckons.

The property taxes comes in the wake of a fresh round of cooling measures in December 2021, which included higher Additional Buyer’s Stamp Duty (ABSD) rates for Singaporeans and Permanent Residents purchasing their second and subsequent properties. Meanwhile, foreign buyers saw ABSD go up from 20 per cent to a stiffer 30 per cent.

Tay added: “Between the ABSD and the property tax rate increases, ABSD would comparatively have more of a dampening effect than property tax.”




Property Tax Rates Budget 2022