Measures to curb wealth inequality can range from levying taxes on business, capital gains, inheritance and property, as well as schemes to help the less well-off own their homes and invest to build retirement nest eggs.
Private-home owners here pay recurrent property taxes as well as stamp duties on transactions that include buyer’s stamp duty (BSD) and additional buyer’s stamp duty (ABSD). The property cooling measures do not stop rich locals or foreigners from buying multiple homes here so long as they are willing to pay the high transaction costs.
No cap applies to the number of homes an individual can own. The wealthy can still build up portfolios of homes here, including those with freehold tenure, for wealth preservation and handing over to the next generation.
With the new ABSD rates, a citizen who wants to put tens of millions of dollars into homes may now want to put this sum into 1 or 2 properties, rather than 3 or more units. The rich could own fewer homes but each home may be larger in size and more opulent.
Nonetheless, the property cooling measures do help combat wealth inequality by raising transaction costs for some who are buying homes for investment and weakening the investment case of homes via slowing the pace of increase in home prices.
Wealth creation from owning homes is still possible as home prices should rise over time if the economy grows, income levels rise, infrastructure improves, and Singapore continues to be a safe haven. However, with the cooling measures, growing wealth through owning homes becomes less attractive as it will be more difficult to build up holdings of homes and price appreciation may be more muted going forward.