Chart of the Day: Here’s why the ABSD for foreigners is likely to be relaxed soon

Foreign home purchases have dropped to record lows.

The government is likely to tweak the Additional Buyer’s Stamp Duty (ABSD) in the near future, now that high-end home prices have declined to artificially-suppressed levels.

This chart from Maybank Kim Eng shows that total property purchases by foreigners have fallen to a low of 9.3% of all home sales in the fourth quarter of 2014. This is a far cry from the 19.5% of total sales recorded in the fourth quarter of 2011.

“With limited foreign home purchases in recent months, we think the stamp-duty quantum for foreigners could be relaxed. Yet, in order to not revive resentment among residents about buying competition from foreigners, we expect this relaxation to target high-end homes. We reckon stamp duties may only be lowered for purchases above a certain price quantum,” stated Maybank Kim Eng.