Tag Archives: Residential area

Singapore Property Market Cooling Measures

Below is a comprehensive view of the latest government policies related to the residential property market. These policies are often referred to as the ‘Property Market Cooling Measures‘.

Source : SRX


» Click to Calculate your Stamp Duty.

A Brief Summary of Cooling Measures

1. Additional Buyer’s Stamp Duty (ABSD)

Citizenship ABSD Rate on Primary
Home Purchase
ABSD Rate on Secondary
Home Purchase
ABSD Rate on Tertiary &
Subsequent Purchase
Singapore Citizens N/A 0% –> 7% 3% –> 10%
Permanent Residents 0% –> 5% 3% –> 10% 3% –> 10%
Foreigners1 and non-individuals 10% –> 15% 10% –> 15% 10% –> 15%

Note:1.Citizens of the USA, Switzerland, Liechtenstein, Norway, Iceland will be treated the same as Singapore Citizens due to FTA agreement.

2. Sellers’ Stamp Duty (SSD)

Residential Property Sold In Year 1 Year 2 Year 3 Year 4
SSD Rate since Feb 2010 Same as basic
Buyer Stamp Duty
SSD Rate since Aug 2010 Same as basic
Buyer Stamp Duty
2/3 of basic
Buyer Stamp Duty
1/3 of basic
Buyer Stamp Duty
SSD Rate since Jan 2011 16% 12% 8% 4%

3. Loan-to-Value (LTV) Ratio

Source: SRX / StreetSine

Policy Details

Effective Date Major Cooling Measures that Affect Residential Property Market
27 August, 2013 1. Singapore Permanent Resident Households need to wait three years from the date of obtaining SPR status, before they can buy a resale HDB flat.
2. Maximum tenure for HDB housing loans is reduced from 30 years to 25 years. The Mortgage Servicing Ratio (MSR) limit is reduced from 35% to 30% of the borrower’s gross monthly income.
3. Maximum tenure of new housing loans and re-financing facilities granted by financial institutions for the purchase of HDB flats (including DBSS flats) is reduced from 35 years to 30 years. News loans with tenure exceeding 25 years and up to 30 years will be subject to tighter LTV limits.
29 June, 2013 1. TDSR: Financial institutions are required to consider borrowers’ other outgoing debt obligations when granting property loans. His total monthly repayments of his debt obligations should not exceed 60 per cent of his gross monthly income.
2. In particular, MAS requires:
-borrowers named on a property loan to be the mortgagors of the residential property for which the loan is taken;
-“guarantors” who are standing guarantee for borrowers otherwise assessed by the financial institutions at the point of application for the housing loan not to meet the TDSR threshold for a property loan to be brought in as co-borrowers; and
-in the case of joint borrowers, that financial institutions use the income-weighted average age of borrowers when applying the rules on loan tenure.
12 January, 2013 1. ABSD: Citizens pay 7/10% on second/third purchase (from 0/3%); Permanent Residents (PR) pay 5/10% for first/second purchase (from 0/3%); foreigners and non-individuals now pay 15%.
2. LTV for second/third loan now 50/40% from 60%; non-individuals’ LTV now 20% (from 40%).
3. Mortgage Servicing Ratio (MSR) for HDB loans now capped at 35% of gross monthly income (from 40%); MSR for loans from financial institutions capped at 30%.
4. PRs no longer allowed to rent out entire HDB flat.
6 October, 2012 1. Mortgage tenures capped at a maximum of 35 years.
2. For loans longer than 30 years or for loans that extend beyond retirement age of 65 years: LTV lowered to 60% for first mortgage and to 40% for second and subsequent mortgages.
3. LTV for non-individuals lowered to 40%.
8 December, 2011 1. ABSD introduced for further cooling measures:
– Foreigners and non-individuals pay 10%, PRs buying second and subsequent property pay 3%, Singaporeans buying third and subsequent property pay 3%.
2. Developers purchasing more than four residential units and following through on intention to develop residential properties for sale would be waived ABSD
– To qualify, developers have to produce proof of development and sale within five years.
14 January, 2011 1. Holding period for imposition of SSD increased to four years from three.
2. SSD rates raised to 16%, 12%, 8% and 4% of consideration.
3. LTV lowered to 60% from 70% for second property.
4. LTV for non-individual residential purchasers capped at 50%.
30 August, 2010 1. Holding period for imposition of SSD increased to three years from one.
2. Minimum cash payments raised to 10% from 5% for buyers with one or more outstanding housing loans.
3. LTV lowered to 70% from 80% for second properties.
20 February, 2010 1. Introduction of SSD for residential property and land sold within one year of purchase.
2. LTV lowered to 80% from 90% on all housing loans except HDB loans.
14 September, 2009 1. Interest absorption scheme (deferment of instalments until TOP) and interest-only housing loans (interest payment only until TOP) were scrapped for all private properties.

Home Price could dip by end 2015

Home prices could fall by as much as 20 per cent by the end of 2015 due to oversupply, tougher loan rules and rising interest rates, say analysts. The property market may be nearing a breaking point as Government cooling measures and increased housing supply put pressure on prices while a potential spike in interest rates is set to further dampen demand, Barclays’ economist Joey Chew warned. It does’t need a genius to predict what’s gonna happen if there is a increase in supply and reduce in demand. No prize for correct answer!

URA’s Research shows that vacancy rate for private residential properties is increasing. Currently at 5.6% for 2Q 2013, which translate to about 15,833 units. This sudden inflation in the number of vacant units could result from many newly completed mass-market projects in the past few months. Expected the vacancy rate to increase further as wave after wave of new residential properties will be completed in near future till 2016. Historically, when vacancy rate hits 8%, rents and prices tend to start declining.  

( *  The vacancy rate is the percentage of the existing stock that is vacant and is based on surveys carried out by URA. Due to the large number of private residential units, the survey on their vacancy rate is conducted on a random sample basis every quarter. The vacancy of the sampled private residential units is inferred from the consumption levels of water and electricity as recorded by the Power Supply and field visits are carried out for doubtful cases. )

Pipeline Supply of Private Residential Units and EC

The risk of a major property price correction in the next two years is emerging. Housing supply is also reaching a record high, with 120,000 private and public homes coming on stream in the next three years. A bubbly housing market is harmful for our economy because household and banks’ exposures to the property market are higher today.

However, I believe that when price start to adjust, government may remove some restrictions on the existing cooling measures in order to stimulate the market. New buyers and up-graders will come into resale market again and thus push up the transaction volume. And the cycle repeat. History always repeat itself don’t they?

Source – Straits Time, URA, Barclays

Singapore’s property price are expected to drop by up to five percent due to an oversupply – Expert


Singapore Skyline

Property experts are expecting an oversupply in the local residential sector from 2014 if the global and domestic economies do not rebound back and curbs on foreign buyers for private residential sales continue to remain un-reviewed.

Kwek Leng BengPrivate home prices in Singapore are expected to drop by up to five percent due to an oversupply of residential properties from 2014 onwards, said Kwek Leng Beng, Executive Chairman of City Developments Limited (CDL) according to an article in Chinese newspaper, LianHe ZaoBao

I don’t believe for a moment the market will collapse, but I believe it can go down. I believe the government is astute enough that by 2015 or thereabouts, it may possibly remove some of the (cooling) measures – because 90.2 percent of Singaporeans own property and it is not their intention to crash the market.” said the Executive Chairman of City Developments Limited (CDL) , second largest developer in Singapore.

City Developments (CDL) also said it is not looking to put in top-dollar bids on land tenders just to grow its land bank in Singapore. This is due to the so-called “qualifying certificate”, which requires developers of high-end residential projects to sell their new homes within two years.

CDL’s Executive Chairman Kwek Leng Beng said: “It will be suicidal to keep on tendering land at high prices and you know (it is) just because you want land bank. It’s not the policy of our company to keep tendering land at the high prices.”

Even though the TDSR framework has made borrowing more difficult for buyers and investors, the EC segment is seen to be the least affected by the cooling measures.

Source – http://www.zaobao.com.sg/ , http://www.straitstimes.com


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