Singaporean government introduces seventh round of cooling measures

Reactions to the latest round of cooling measures in Singapore are divided.

In Singapore, the government have announced the seventh round of property cooling measures since 2009. The new measures came into effect on 12 January 2013.

Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance stated, "The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market. We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road."

According to the government statement, the new measures are intended to control increased demand for residential property, infuse higher financial caution among buyers, and require owner occupation by PR buyers.

Additional Buyers Stamp Duty (ABSD) rates were increased between five and seven percentage points across the board. Loan-to-value limits on housing loans were tightened for those who already have one or more outstanding loans. The minimum cash deposit for individuals applying for a housing loan was raised from 10 percent to 25 percent. This does not apply to first time buyers. These measures should not impact most Singaporeans who are buying their first residential property, according to the government statement. Concessions will be granted to certain groups of buyers. According to authorities, the ABSDs are temporary measures that will come under review in the future.

Overseas buyers have to pay total stamp duties of 18 percent of a property's valuation, up from 13 percent. Foreigners with permanent residency in Singapore have to pay eight percent stamp duty, up from three percent. Singaporeans still pay three percent stamp duty for their first purchase, but pay more for additional properties.

Measures were tightened on eligibility loans to buy HDB flats. Permanent residents (PRs) who own a HDB flat will no longer be able to sublet the entire flat. PRs who own a HDB flat must sell their flat within six months of buying private residential property in Singapore.

Cooling measures in the executive condominium (EC) sector aim to guarantee ECs remain affordable for middle income Singaporeans. The maximum strata floor area of new EC units was capped at 160 sq m, and the sales of new dual-key ED units was reserved for multi-generational families.

The government introduced Seller's Stamp Duty (SSD) on industrial property to dampen speculative activity. SSD at 15 percent applies if the property is sold within the first year of purchase. SSD of 10 percent applies if the property is sold within the second year of purchase. SSD of five percent applies if the property is sold within the third year of purchase.

Reactions to the cooling measures are divided. Some market experts agreed that the immediate effect would be a short-lived withdrawal from the property market as buyers embrace a "wait and see" attitude.

Phang Lah Hwa, OCBC Bank's head of consumer secured lending, stated, "We expect home buyers to naturally become more cautious and take time to review their options."

Despite the measures, the Real Estate Developers' Association of Singapore (REDAS) remains confident in the long term future of Singapore's property market.

However, Mohamed Ismail, chief executive of Propnex Realty believes that the impact of the measures will be more sustained. He said, "Overall, the impact will be felt over a quarter to half a year, during which we will see a drastic drop in the buying activities for private homes".

Steve Melhuish, chief executive officer of PropertyGuru Group expressed concern that the latest round of cooling measures may have gone too far. He stated, "… we think the severity of what has been introduced will surprise many."

 

Article source: http://www.thethailandlinks.com/2013/01/15/singaporean-government-introduces-seventh-round-of-cooling-measures/