More Property Market Measures Announced

SINGAPORE: The government has announced more measures to maintain a stable and sustainable property market.

From Friday, the holding period for imposition of Seller’s Stamp Duty (SSD) will be raised to four years from the current three.

The following  SSD will be imposed if you purchased your property and selling it from 14 Jan 2011 onwards:

Year 1 – 16%

Year 2 – 12%

Year 3 – 8%

Year 4 – 4%

The SSD rates would also be raised while the Loan-To-Value (LTV) limit would be lowered to 50 per cent on housing loans for property buyers who are not individuals.

The LTV limit would also be lowered to 60 per cent for individual property buyers with one or more outstanding housing loans.

The government said its objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals.

Analysts said they believe the measures could further curb speculation in the market.

Research Consultancy SLP International executive director Nicholas Mak said: “This is going to basically drive another nail into the coffin of anybody who has thoughts of short-term investments — in other words speculation in the property market.

“This is quite a drastic measure to try to drive out short-term investors because by raising the Seller’s Stamp Duty to a very punitive rate of eight per cent and above basically creams off all the profits that a short-term investor hopes to gain”.

Chesterton Suntec International head of research and consultancy Colin Tan said he was surprised at the timing of the new measures.

“I think everyone recognises that the liquidity problem is a global one and that the measures are meant to inject some sanity at certain points in time,” he said.

“I think everybody (had) never expected them to last very long but apparently it’s so strong that they feel that maybe quite soon, after August 30, they need to act again.

“The message sent here is pretty strong. I think for a while the market should cool down.”

Previous measures have, to some extent, moderated the market, but sentiments remain buoyant.

It said 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.

Moreover, when interest rates eventually rise, it could strain purchasers who have overextended themselves financially.

Therefore, the government said it has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence among property purchasers.

It said there’s an ample supply of private residential units, and buyers need not rush to buy now.

It added it would continue to ensure an adequate supply of housing to meet demand.

The government also said it would continue to monitor the property market closely and take further steps to promote a stable and sustainable property market if necessary.

Source – CNA/wk

Food for thought: What does this mean for us as property investors or home buyers? Well, as long as our intent is right, ie. not speculating, flipping if you may like, then there is no issue at all. It is still the normal approach to property investment.

This would only affect those who flip options, or speculate and hoping to make a killing in profits will be affected and concerned, as it may not be so “profitable” any more.  In any investment, always remember to apply fundamentals and do your sound research. Speak to people who are investors and increase your financial IQ. It will not go wrong. Till then… Awesome! :)

This entry was posted in Real Estate Regulation. Bookmark the permalink.

One Response to More Property Market Measures Announced

  1. Jack Yu says:

    Yes, the measures will only affect speculators. So long as one invests the proper way (hold long term), the higher Seller Stamp Duty will not affect you. However, there will be a group of buyers (first time investors who already own units on which they’re still repaying the loans) who will be affected as they will have to contend with higher cash outlay. There is no perfect solution for everyone, but the measures will be good for the overall market!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>