Concerns about the swift rise in private home prices have prompted the authorities to further tighten cooling measures.
The Government had announced that Additional Buyer’s Stamp Duty (ABSD) rates will be raised and Loan-to-Value (LTV) limits on residential property purchases will be tightened, to cool the property market and keep price increases in line with economic fundamentals.
Based on these higher stamp duties, the cost of second and successive properties for Singaporeans and permanent residents will increase by 5 per cent. This ABSD applies to even the first property purchase of foreigners.
Residential property buyers will also be allowed to borrow less. The proportion of a property's value that a buyer can borrow, known as LTV limit, has been slashed by five percentage points.
These measures do not apply to residents taking Housing Board loans.
For developers purchasing residential properties for housing development, they will be subject to an ABSD of 25 per cent, up from 15 per cent, although this will not be applied if they fulfil several conditions, including completing and selling all their units within a prescribed period.
However, they must pay upfront an extra 5 per cent of the property price, and this will not be waived. This will have an impact on properties sold en bloc.
The moves are aimed at dampening demand. The Government's second-quarter flash estimates had shown private home prices rising by 3.4 per cent, bringing the total increase to 9.1 per cent over four quarters since the middle of last year.
This uptrend came after 15 straight quarters of decline, which pushed private home prices down 11.6 per cent by the middle of last year.
The steep price recovery led Minister for National Development Lawrence Wong to say that the Government is "concerned that prices are running ahead of economic fundamentals".
"We want to avoid a severe correction later, which can have more destabilising consequences. Hence, we are acting now to maintain a stable and sustainable property market," Minister Wong added.
Source: “Higher stamp duties, tighter loan limits for home purchases”, (The Straits Times, 6 July 2018)