Tough New Measures To Cool Property Market

[neubie 2]

ST 13/1/2011

THE Government announced on Thursday the fourth round of property cooling measures to 'maintain a stable and sustainable property market'.

They include:

1) Increasing the holding period for imposition of Seller's Stamp Duty (SSD) from the current three years to four years;

2) Raising the SSD rates to 16 per cent, 12 per cent, 8 per cent and 4 per cent of consideration for residential properties which are bought on or after Friday, and are sold in the first, second, third and fourth year of purchase respectively;

3) Lower the Loan-To-Value (LTV) limit to 50 per cent on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals

4) Lower the LTV limit on housing loans granted by financial institutions regulated by the Monetary Authority of Singapore from 70 per cent to 60 per cent for property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase.

The measures will take effect on Friday.

[LPG 0]

ST 13/1/2011

I wonder what it actually means to present home buyers like me who

Has already booked 1st appointment.

Loan already signed, already exercised my OTP with 5k downpayment

[neubie 2]

BT 14/1/2011

New steps rain on speculators' parade

Big hike in seller's stamp duty and mortgage restrictions to cool property market

(SINGAPORE) Starting today, speculators in the Singapore property market will find their ardour cooled by a severe new regime. The seller's stamp duty for private homes will rise to as high as 16 per cent, from up to 3 per cent previously, while tighter mortgage restrictions will be put in place.

The government yesterday unveiled a new and stronger round of demand-side cooling measures - the third set in less than 12 months.

The killer move, according to analysts, is a sharp hike in the seller's stamp duty to 16 per cent, 12 per cent, 8 per cent and 4 per cent respectively for properties that are bought on or after Jan 14 this year and are sold in the first, second, third and fourth year after purchase.

Previously, owners who sold houses and apartments less than three years after buying them had to pay a seller's stamp duty of only up to 3 per cent.

Singapore also further slashed the Loan-To-Value (LTV) limit on housing loans for both individual and corporate buyers.

Its move follows Hong Kong's, which in late November 2010 announced some of its toughest-ever measures to cool the property market - including a stamp duty of as high as 15 per cent on apartments sold within six months of purchase. Hong Kong also tightened mortgage restrictions.

Analysts expect the higher seller's stamp duty will wipe out most speculators' gains and keep them out of Singapore's property market.

'For those buyers who intend to flip their properties within one or two years, the increased seller's stamp duty erases their potential gains,' said Merrill Lynch economist Chua Hak Bin. 'So this measure is pretty targeted and will take away a big chunk of these potential investors.'

But most analysts found the unexpected sharp hike in the seller's stamp duty to be harsh. In addition to hindering short and medium-term investors, it could also hurt genuine owner-occupiers looking to change homes.

International Property Advisor chief executive Ku Swee Yong said that a staggered-down capital gains tax - one that could perhaps be imposed only on capital gains from real estate - might have been more advisable. This would spare those who sell their properties at a loss.

'The government's intention of forcing people to treat real estate as a long-term investment is admirable,' said Mr Ku. 'But this (the higher seller's stamp duty) will force people to hold, including some genuine cases where there might be a real need to sell off a property.'

In addition, Singapore lowered the LTV limit on housing loans from 70 per cent to 60 per cent for individual buyers with one or more outstanding housing loans at the time of the new home purchase.

And for corporate purchasers (such as firms, trusts and collective investment schemes), the LTV limit has been cut to an even lower 50 per cent - regardless of the number of outstanding housing loans at the time of the new home purchase.

In August 2010, the government reduced the LTV ratio from 80 per cent to 70 per cent.

Yesterday's measures follow three gentler sets in September 2009, and February and August 2010.

'Previous government measures have to some extent moderated the market, but sentiment remains buoyant,' said the National Development and Finance Ministries in a joint statement with Singapore's central bank, the Monetary Authority of Singapore.

'Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals.'

Private home prices rose 17.6 per cent last year, according to flash estimates. A record 15,500-16,500 new private homes are also estimated to have been sold in 2010.

In a statement, the Real Estate Developers' Association of Singapore (Redas) said it has 'taken note' of the latest measures.

The measures will discourage speculative demand and will encourage longer-term holding of properties which will contribute to the stability of the market, Redas said: 'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors.'

Merrill Lynch's Dr Chua also said that in addition to curbing speculators, the government could be concerned by aggressive mortgage lending by banks.

Analysts expect the volume of new home sales to fall in 2011 but were spilt on whether the new measures will cause private home prices to decline.

'There will be a sense of uncertainty in the market leading to hesitation among buyers and sellers and we can expect to see transactions easing in the short term,' said Credo Real Estate executive director Ong Teck Hui.

But the measures may not lead to an immediate price decline in Q1 2011, he said. This round of measures is still not as severe as the anti-speculation measures announced in May 1996, which resulted in a 1.9 per cent drop in prices in Q3 1996. But any upside in prices in Q1 2011 will be 'minimal', Mr Ong added.

But in any case, analysts said that the 5-10 per cent growth in private home prices for the whole of 2011, which they predicted just one week ago, now looks highly unlikely. They also expect property stocks to fall today in reaction.

Details here

[blue_skies 3]

ST 13/1/2011

What a pile of crap.

Not sure what other forummers views are on this, but I'd say the measures won't cause the property prices to drop. It'll just stagnate, but unlikely to see a dip unless govt releases some bad news on recession or jobless rates etc.

Edited January 14, 2011 by blue_skies

[chronograph 0]

Hum..... more $$$ to the government. That's all they can think of? Always $$$.

[May_dream1 14]

I wonder what it actually means to present home buyers like me who

Has already booked 1st appointment.

Loan already signed, already exercised my OTP with 5k downpayment

depends whether yours is 1st loan or 2nd loan. If loan from hdb, no difference, only loan from financial institution.

[Jgal 0]

http://business.asiaone.com/Business/My%2B...113-258100.html

[forgotten 1]

No impact to the super rich lor.

[Jgal 0]

I believe that there will be a scamble to sell in the coming months as the pool of buyers has shrinks drastically.

Individual buyer has to fork out 40% from the current 20% which is ard $200k more, while trust and companies even more.

Speculators that bought units before TOP with limited fund will be in the hurry to sell off as they have no extra cash/cpf after TOP. I believe D15/D16 condos not overlooking the sea maybe affected as many were buying with flipping intention. The psf there is quite unbelievably high compared other districts and is comparable to D09/D10. Def, they will be bound to adjustment.

[Maximus 0]

I believe that there will be a scamble to sell in the coming months as the pool of buyers has shrinks drastically.

Individual buyer has to fork out 40% from the current 20% which is ard $200k more, while trust and companies even more.

Speculators that bought units before TOP with limited fund will be in the hurry to sell off as they have no extra cash/cpf after TOP. I believe D15/D16 condos not overlooking the sea maybe affected as many were buying with flipping intention. The psf there is quite unbelievably high compared other districts and is comparable to D09/D10. Def, they will be bound to adjustment.

Individual buyer fork out that much only if 2nd property or more ...

[Jgal 0]

No impact to the super rich lor.

Interesting to note that the super rich are not the ones that are inflating the mkt. High-end housing is still moving slowly. It's the mass mkt buyers that are buying in hope that prices will go up and make some $$ out of it .

[neubie 2]

Interesting to note that the super rich are not the ones that are inflating the mkt. High-end housing is still moving slowly. It's the mass mkt buyers that are buying in hope that prices will go up and make some $$ out of it .

think so. it's the forgotten middle-class who is not here nor there that is worst hit...

[Jgal 0]

Actually with the new policy , only the flippers will be hit lah.

Those havent buy their pte pty, can see the prices coming down or at least stablised.

Those bought their pty for own stay, can enjoy their pty. Just need to forget abt making quick $$ for a while.

Those in HDB / EC, not affected.

[bepgof 20]

These news rules are within expection at this point of time, with prevailing low interest, "good" economic(Asia), mainly aim to

- curb short-term speculation, more rules may come if price still up (>3%qoq).

- to paint a better CPI.

- as an "invisible" reservoir to suck hot money caused by QEs.

- look like to discourage general sinagporeans to have a "2nd home" at this point of time.

Personally, I think these rules come at right timing before things get out of controls. But don't understand borrow money from Ah Kong why still keeps at 10%: 90%, thought interest rate at 2.6%. HDB 1st timer will chiong. Whether it is against competition law? Is there such a law in Singapore? Law maker violated law set can be sued?

Edited January 14, 2011 by bepgof

[smurfzzz 0]

Can someone enlighten me on whats "individual" and whats "non individual"?

If im buying the 2nd property with my partner, what happens?