Singapore government announces more anti-speculation measures
January 17, 2011 - Singapore
Singapore's government announced a new round of cooling measures yesterday aimed at keeping the property market stable and sustainable. The latest measures - the fourth round in 16 months - are as follows:
-The holding period for the imposition of a Seller's Stamp Duty (SSD) has been increased from three to four years.
-For residential properties bought on or after January 14, 2011, SSD rates have been raised to 16 per cent for those sold in the first year of purchase, 12 per cent for those sold in the second year, 8 per cent if sold in the third year, and 4 per cent if sold in the fourth year.
-The Loan-to-Value (LTV) limit has been lowered to 50 per cent on housing loans granted by financial institutions regulated by the Monetary Authority of Singapore (MAS) for property purchasers who are not individuals
-The LTV limit on housing loans granted by financial institutions regulated by MAS has been lowered from 70 to 60 per cent for property purchaser who are individuals with one or more outstanding housing loans at the time of the new home purchase.
"The Government's objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals," the Ministry of National Development, Ministry of Finance, and MAS said in a joint statement.
"The previous government measures have to some extent moderated the market, but sentiments remain buoyant. The seller's stamp duty rates will be increased sharply so as to provide a strong disincentive for investors looking to make short term gains."
An immediate impact of postponement of new project launches by developers and a decrease in new housing loan application is expected, but many in the real estate industry believe that conditions in Singapore's property market will remain favourable.
The Real Estate Development Association of Singapore said in a statement that the measures will discourage speculation, but that the "property market will continue to be underpinned by sound economic fundamentals and a favourable business environment."
"The government is erring on the side of caution," Donald Han, Singapore-based managing director at real estate services company Cushman & Wakefield, told Bloomberg Businessweek.
"We need to monitor this because history has shown that some of these measures lasted only two to three months, and the market comes right back to full life again."
Han said that the timing of the measures, a few days before December home sales statistics are announced, suggest that the government may be concerned about a rise in sales volume and prices from September to December.
As intended, the measures will most adversely affect those looking to make a quick buck on "flipping" a property. "This new round of cooling measures will adversely affect sentiment in the property market in the coming months," said Nicholas Mak, an executive director at SLP International Property Consultants in Singapore.
"They could also catch many investors who had bought residential properties in the last two years by surprise. Some of the buyers could be investors who are banking on rising property prices to make a quick profit."
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