LOWER property tax bills will likely not have much material impact on a homebuyer’s decision to purchase a property, OCBC Investment Research said on Monday (Feb 19).

Last Friday, Finance Minister Lawrence Wong announced in his Budget speech that property annual value bands (AV) for owner-occupied residential properties will be revised upwards from Jan 1, 2025.

The move is expected to result in homeowners paying the same or lower property tax bills, assuming no change in their properties’ AV and before any rebate.

“Although the reduced property tax bill will bring relief to homeowners, we do not believe this alone will materially change a potential homebuyer’s decision to purchase a property,” said OCBC.

Its most preferred Singapore-listed property counter is real estate investment manager CapitaLand Investment, which is trading at a consensus price-to-book (PB) multiple of 0.98 times as at Feb 16.

This is followed by property developers UOL, which is trading at a consensus forward PB multiple of 0.46 times and City Developments Limited, which is trading at a consensus forward PB multiple of 0.56 times.

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Another measure announced during the Budget is the reduction of the Additional Buyer’s Stamp Duty (ABSD) clawback rate for developers that are able to sell at least 90 per cent of a project’s units within the prescribed timeline.

The move is widely expected to give property developers more flexibility, although it does not go far in lowering costs or offering relief, according to observers.

For OCBC, the fact that at least 90 per cent of units need to be sold to qualify for the lower ABSD clawback rate is the government’s signal to developers not to hog inventory and ensure that housing supply remains available on a prompt basis.

“We view this change as a slight positive to property developers as the previous ABSD rates are viewed as onerous, and some units in a development project can be difficult to sell due to more undesirable characteristics,” OCBC added.

Housing developers would also feel less pressure to lower prices in order to move the units.

That being said, OCBC does not expect the current soft sentiment towards landbank replenishment to change. Developers will likely continue to show caution when bidding for land tenders.

When it comes to indirect impact on the property sector, the research team believes that various supportive measures could also benefit developers and real estate investment trusts that own shopping malls due to the increase in consumption spending.

These measures include the additional S$600 of Community Development Council vouchers, personal income tax rebate of 50 per cent capped at S$200, and S$200 in LifeSG credits to all past and present national servicemen.

Looking ahead, OCBC is projecting private residential price growth of 1 to 3 per cent in 2024. It also expects private home rents to decline by at least 5 per cent and private new home sales to range between 6,000 and 7,000 transactions.