En-bloc market to collapse following ABSD rate hike: analyst

Singapore increased the ABSD for all residential statuses by 3% to 30%.

The steep hike in the Additional Buyer's Stamp Duty (ABSD) will likely hurt the en-bloc market, which has already been slowing down before the implementation of the latest cooling measure, according to Vijay Natarajan, an analyst from RHB.

In a report, Natarajan said the en-bloc market will likely “collapse” and “come to a standstill” due to pricing expectation mismatch.

Apart from the en-bloc market, RHB expects the hike to impact land prices. 

“We believe the biggest impact from the measures will be on land purchases, with developers likely to turn more cautious with their bids in light of recent measures, increased land supply, and weakening macro conditions. In our view, this could pave the way for sustained lower property prices in the future and moderate the overall property market,” Natarajan said.

Other segments that will likely feel the hike's impact are the resale market and high-end segment, which Natarajan said will see a price correction.

“Post measures, we expect further divergence in pricing expectations between buyers and sellers in the resale market. This should initially result in a slowdown in transaction volumes and eventually result in price corrections,” the analyst said.

“We believe sellers are more likely to adjust their prices lower amid sharply rising holding costs and a slowing labour market. Similarly, the high-end luxury market will also be impacted as foreign buyers typically account for a significantly high proportion (20-40%) in this segment,” the expert added.