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 economic fundamentals.
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.