Singapore Introduces Property Market Calming Measures
Monday, January 17, 2011
While previous measures are said to have, to some extent, moderated Singaporeís
property market, sentiment remains buoyant and the government has now announced
further changes aimed at maintaining a stable and sustainable property market.
The government's objective is to ensure a property market where prices move
in line with economic fundamentals. However, it is feared that continued 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
Moreover, when interest rates eventually rise, it could strain purchasers who
have overextended themselves financially, and therefore, the government has
decided to introduce additional targeted measures to cool the property market
and encourage greater financial prudence among property purchasers.
The holding period for the imposition of sellerís stamp duty (SSD) has
been increased from the current three years to four years; and the SSD rates
have been raised sharply to 16%, 12%, 8% and 4% of the sales consideration for
residential properties which are bought on or after January 14, 2011, and are
sold in the first, second, third and fourth year of purchase, respectively. The
impact of the SSD is especially significant as it is payable regardless of whether
the property is eventually sold at a gain or loss.
In addition, the Loan-To-Value (LTV) limit has been lowered to 50% on housing
loans for property purchasers who are not individuals (including corporations,
trusts and collective investment schemes, amongst others); and from 70% to 60%
on housing loans for property purchasers who are individuals with one or more
outstanding housing loans at the time of the new housing purchase.
The measures took effect on 14 January 2011.