ERA’s Wishlist for Budget 2025

Singapore’s real estate landscape continues to grapple with a myriad of challenges. These issues, ranging from affordability concerns to older housing with decaying leases, underscore the urgent need for policies that align with the aspirations of Singaporeans while ensuring sustainable growth in the property market. As we approach Budget 2025, ERA wish to share our wish-list of changes to tackle these challenges ahead.

Today’s market is reflective of genuine buyers’ demand. The continued residential property price growth is indicative of deeper concerns around the real estate market. The 2024 ERA’s “My Dream Home Survey” revealed that while 79% of respondents are satisfied with their current housing arrangements, many still aspire to upgrade but remain concerned about affordability.

A basic roof-over-our head is already a “given”. Many Singaporeans have strong aspirations to upgrade to private homes. Meanwhile, rising private home prices (pushed up by increasing land and development costs) are fuelling concerns around future upgrading possibilities. Singaporeans also desire the flexibility to stay in their preferred locations, without being priced out to less ideal locations.

In the HDB resale market, Singaporeans are concerned about decaying leases and as such, most buyers would naturally prefer flats with longer remaining leases. Consequentially, with demand skewed towards “younger” or newer HDB resale. This may have continued to push up resale HDB prices despite pushed up year after year; despite the government increasing the BTO supply. Indirectly this may also have led to the increasing number of million-dollar flat transactions.

It has been a challenging year for residential enbloc and the new home segment. The bumper supply of GLS sites since 2023 offered developers ample supply of residential sites and enbloc sites have become comparatively less attractive due to the complexities and time taken.

With the higher cost of replacement homes, further aggravated for foreign owners who are subject to the 60% ABSD on their home purchase, enbloc sellers demand for increasingly higher prices during the enbloc attempts. However, this hampers the success of enbloc sales and over time, hampers the rejuvenation of the housing landscape as residential projects continue to age.

ERA’s wishlist for Budget 2025

ABSD Regime: Differentiate between Single Property Upgrader and Multi-Property Investor

Our ABSD regime is mature and operationally well-run. It may be an opportune time to look at how we can differentiate between a single property upgrader and multi-property investors. Can we allow homebuyers upgrading or downgrading with no intention of holding onto two properties to not pay ABSD?
The existing ABSD remission applies only to married couples and seniors; and one needs to pay ABSD upfront then apply for refund later.
So, for a Singaporean family that genuinely want to upgrade from their HDB flat to a $2 million private residential property (and eventually just own that one private residential property), the current ABSD regime requires them to sell their HDB flat before buying the private residential property or pay $400,000 ABSD first should they decide to buy first then sell.
This is totally impractical and unrealistic; and many Singaporeans do see this as the government stifling their upgrading aspirations. They are genuine upgraders and not multi-property investors.
We hope the government would consider to relook at the ABSD mechanics to enable more Singaporeans to fulfil their upgrading dreams.

ABSD for Foreigners:

Reduction of the ABSD for foreign buyers to between 30% and 60%.
The market feels the current 60% ABSD is too high and if the government feels that 30% is too low, perhaps we can find a middle ground.
This will help to support the foreigner population that have decided to reside and invest in Singapore. Those who are unable to secure PR status will need to pay 60% ABSD if they wish to purchase a home, making it very challenging for them to stay in Singapore long-term.

Executive Condominiums:

Relook at the EC model as it is becoming unsustainable with rising prices.

Based on the maximum household income ceiling of $16,000, EC buyers can only borrow a maximum of around $1 million from the banks. With new EC prices ranging $1.3m to $1.8m, most new EC buyers have to come up with significant cash to fund their purchase. This may lead to unnecessary actions like getting the parents to chip in or taking additional unsecured loans.
As any further adjustments in the eligibility criteria like raising the income ceiling may just be kicking the can down the road (new EC prices continuing to rise due to rising land and development costs); it may be worthwhile to consider scrapping or tweaking the EC scheme altogether.

Enbloc Rules:

Allow older 99-yrs development with less than 60 years lease remaining to lower the mandatory consensus for collective sales, from 80% to 70%.
This will encourage rejuvenation of older strata developments which may be increasingly becoming an eyesore or even have safety risks as the physical condition of the development deteriorate over time.

HDB Leases:

Allow older HDB flats to upgrade their leases by 20 or 30 years.

This would provide buyers with more resale options and address concern around decaying leases. With more resale options that have longer leases available, this may slow down the pace of price growth in the long term.

Whilst we understand the government’s concern over rising home prices, it is important to note that the rising prices were cost driven and not fuelled by speculation or excessive buying by foreigners. We hope our government will be sensitive and supportive of the Singaporean aspirations to upgrade and consider to relook at removing unnecessary road-blocks.

Disclaimer

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