The upcoming increase in property taxes is one sign that the property market has remained relatively buoyant. The annual values (AVs) of HDB flats and most residential properties will rise from Jan 1, 2024, reflecting higher market rents according to the Inland Revenue Authority of Singapore (Iras). In addition to the higher AVs, property tax rates are also set to increase from Jan 1, 2024 for higher-value private residential properties. This will mark the second and final hike of property tax rates earlier announced during Budget 2022. The impact of the rate increase will be felt by the owners of non-owner-occupied residential properties as well as owner-occupied residential properties with an annual value of more than $30,000, which leaves all owners of owner-occupied Housing Board flats unaffected.
Unwelcome as such increases are to the individual, the overall impact on the property market may be a positive one if it continues to have a moderating influence. Given that those who have purchased private homes for investment income will face higher taxes, this will put more pressure on landlords to be more realistic about rents as they try to avoid having a vacant unit that is not generating rental income. The rental market is already anticipated to ease somewhat as housing supply has been ramped up. Together with elevated interest rates and a general environment of higher property-related costs, this should act to continue to temper sentiment.
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