Just like our ever-expanding waistline, property prices in Singapore can only increase. But unlike the waistline, when new regulations cause a hike in property prices, it’s a cause for concern.

And just like you, we are floored by the sudden announcement of the changes in the Additional Buyer Stamp Duty (ABSD) and the Loan-to-Value limits by the Singapore government.

Reacting out of fear and panic over this change, however, shouldn’t be the case. You’ve got to fully understand the increase in the ABSD and LTV before you drop a huge downpayment on your next flat.

What are the changes to the ABSD?

What is the ABSD? Simply put, it is an additional cost to your property, based on a percentage of the property value. As the name implies, this is an additional cost on top of the Buyer’s Stamp Duty.

The ABS acts as a property cooling measure, in the hopes of stabilising the rising property prices in Singapore. It is applicable only for specific situations. For Singapore citizens, this kicks in once you purchase a second property. For permanent residents and foreigners, this applies on the first purchase.

Property prices, however, haven’t shown any signs of improvement. Private home prices rose to the highest point in four years for the second quarter of 2018. To counter this, the Singapore government revised the ABSD to the following:


Rates before 6 July 2018

Rates after 6 July 2018

Singapore citizens buying first residential property



Singapore citizens buying second residential property



Singapore citizens buying third residential property



Permanent residents buying first residential property



Permanent residents buying second and subsequent residential properties



Foreigners buying residential property



How does the revised ABSD affect you?

As you can see from the above, the changes does not affect Singaporeans and permanent residents if you are buying your first property.

The changes mostly kick in if you're purchasing a second property, or if you're rolling in cash, more properties than the average person.

Is there a way to avoid the revised ABSD?

For married couples, there is a way. However, there are two conditions to be met before you can apply for an ABSD refund:

  • There must be at least one Singapore citizen spouse who jointly purchase the second home
  • The first home must be sold within six months after the purchase date of the second home, or by the issue date of the Temporary Occupation Permit or Certificate of Statutory Completion of the second property, whichever is earlier

Foreigners and permanent residents, as you can see, are not exempt from the ABSD unless they have a Singapore citizen spouse who purchase the unit with them.

However, if the option to purchase (OTP) was granted by sellers to potential buyers before 6 July and it has not been varied from 6 July onwards, there is a transitional phase for such cases.

This exemption will apply if the OTP is exercised within on or before 26 July or the OTP validity period, whichever is earlier.

What are the changes to the LTV limits?

Besides the rise in the ABSD rates, you’ll also face a tighter loan regulation.

So what’s the silver lining amongst the changes? The good news is, the tightening of the LTV limits does not apply to loans granted by HDB. So if you need to cut back on the cash downpayment, taking a HDB loan is still the way to go.

If you’re taking a home loan from a financial institution, the LTV limits will be tightened by 5%.

To recap, home buyers can borrow up to 80%, or 60% if the loan tenure is more than 30 years or extends past age 65.

With a 5% adjustment, the maximum loan amount is now pegged at 75%. This applies to loans that are granted where the option to purchase is issued from 6 July.

Likewise, the LTV limits will also vary based on whether this is your first, second or subsequent housing loans, which we’ve summarised below:


1st housing loan

2nd housing loan

3rd housing loan onwards

LTV limits (before 6 July)

  • Up to 80%
  • 60% if the loan tenure is more than 30 years or extends past age 65
  • Up to 50%
  • 30% if the loan tenure is more than 30 years or extends past age 65
  • Up to 40%
  • 20% if the loan tenure is more than 30 years or extends past age 65

LTV limits (after 6 July)

  • Up to 75%
  • 55% if the loan tenure is more than 30 years or extends past age 65
  • Up to 45%
  • 25% if the loan tenure is more than 30 years or extends past age 65
  • Up to 35%
  • 15% if the loan tenure is more than 30 years or extends past age 65

How does the revised LTV affect you?

Simply put, if your loan amount is lower, it means you’ll need to fork out more cash for the downpayment.

However, take note that the LTV limit is an upper ceiling limit. That means it’s the maximum, not the base amount that you can borrow.

The actual amount you can borrow is still dependent on a few factors, such as the number of concurrent loans you’re servicing.

What should you do?

The new announcement sparked a buying frenzy barely an hour after it went live, with developers of Park Colonial and Riverfront Residences launching their units ahead of their planned date.

For one, do not go into a panic buy. Always monitor the market first and see how it pans out. The ABSD is meant to be a property cooling measure. Should a buying frenzy occur, it will be contrary to the intended effect.

As always, take stock of your finances and determine if you have the capability to pay off the loan. With the revised LTV limits, this is especially crucial if you intend to take a home loan from a bank rather than a HDB loan.

For a start, always compare the various home loans available to you and do your calculations before you commit to it.

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One final point - these measures are still subjected to changes. With no visible improvements in property prices, the Singapore government is keeping a tight watch on it. We have no inkling of how this will pan out, but hopefully it’ll be for the better.

GoBear team

Brought to you by GoBear Insurance Broker (SG) Pte. Ltd., a registered insurance broker with the Monetary Authority of Singapore