Higher stamp duties and tighter loan limits for home purchases
Higher stamp duties, tighter loan limits to dissuade buyers from over-extending financially: Lawrence Wong
Concerns about the swift rise in private home prices have prompted the authorities to further tighten cooling measures in a surprise move last night that will lead to property buyers paying higher stamp duties.
From today, Singaporeans and permanent residents have to pay 5 per cent more for their second and successive properties.
For example, a second home that costs $1 million will incur an extra $50,000 in stamp duties.
But for foreigners, this additional buyer's stamp duty (ABSD) applies even on their first property.
Residential property buyers will also be allowed to borrow less.
The proportion of a property's value that a buyer can borrow, known as the loan-to-value (LTV) limit, has been slashed by five percentage points.
For instance, a buyer taking his first loan on a $1 million home can borrow only $750,000, down from $800,000.
These measure do not apply to residents taking HDB loans.
Developers appear to be hit hardest.
Those purchasing residential properties for housing development 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 the sale of enbloc properties for example.
RISING PRIVATE HOME PRICES
The moves, announced at 7pm, are aimed at dampening demand.
On Monday, the Government's second-quarter flash estimates showed private home prices rising by 3.4 per cent, bringing the total to 9.1 per cent over four quarters since mid-2017.
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 last night that the Government is "concerned that prices are running ahead of economic fundamentals".
The combination of rising interest rates and a large supply of about 30,000 new units that are expected to go on sale in the next two to three years could lead to buyers over-extending financially.
"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," Mr Wong added.
In a bid to beat the higher taxes, property agents sent out messages and crowds flocked to showflats such as Riverfront Residences in Hougang and Park Colonial in Woodleigh last night to sign sales agreements for new homes (see report, below).
New property cooling measures shake up real estate industry
Many in the real estate industry were shocked by the sudden announcement yesterday of a slew of new property cooling measures that will take effect today.
Several industry experts concur that the new measures are needed to put the brakes on escalating private property prices.
It took 15 quarters of market corrections to bring private residential prices down by 11.6 per cent in the second quarter of last year, but flash estimates from the Urban Redevelopment Authority on Monday showed that private home prices rose for the fourth straight quarter, up 3.4 per cent in the second quarter, after a 3.9 per cent increase in the first quarter.
This left the URA's overall private residential price index at just 3.6 per cent below its last peak in the third quarter of 2013 and 9.1 per cent above the last trough in the second quarter of last year.
"It is like administering antibiotics to the nation's real estate sector.
"If you take time to implement the measures, then you will see the developers rushing to put out their launches before the measures take effect," CBRE head of research for Singapore and South-east Asia Desmond Sim noted.
The measures appear to target those who buy for investment purposes, Mr Sim said.
The current additional buyer's stamp duty (ABSD) rates for Singapore citizens and Singapore permanent residents purchasing their first residential property will remain at zero and 5 per cent respectively.
The ABSD rates for all other individuals will be raised by five percentage points and 10 percentage points for entities.
But Mr Sim noted that the measures are ultimately aimed at curbing excessively high land bids by developers.
An extra ABSD of 5 per cent will be introduced for developers buying residential properties for housing development. Dr Lee Nai Jia, senior director and head of research at Knight Frank Singapore, sees sales volume of new and resale private property dropping by about 40 per cent in the coming months because of the latest move to raise the ABSD and tighten loan-to-value (LTV) limits on residential property purchases.
Buyers flock to showflats to buy units before raised ABSD kicks in
Condominium showflats were swarmed last night, with potential buyers wishing to secure units before the rise in additional buyer's stamp duty (ABSD) that kicks in today.
The Government announced that ABSD will be raised by 5 percentage points for individuals.
But this excludes Singapore citizens and permanent residents buying their first residential property.
For new developments such as the 1,472-unit Riverfront Residences in Hougang, where two-bedroom units start at $755,000, buyers would pay at least $35,000 more under the raised ABSD.
Large crowds and full carparks were seen at Riverfront Residences and Park Colonial showflats in the north-east of Singapore, as buyers flocked to grab units before the new rules kicked in.
The former is developed by a consortium led by Oxley Holdings, and the latter - a project led by CEL Development - has 805 units and will be situated next to Woodleigh MRT station.
When The Straits Times visited the Riverfront Residences showflat at about 9pm, hundreds of people were in the queue that extended out into the carpark.
Eager buyers and agents were also seen walking briskly towards the showflat with project brochures in hand.
In the queue were housewives May Lim and Calista Ng, who are neighbours at Starville condominium in Kembangan.
Said Madam Ng, 52, who is looking to buy a two-bedroom unit: "I was midway through my dinner when my agent told me to rush down. But looking at the crowd, we may not get our choices."
Huttons property agent G. Manogaram, who was looking for his clients in the crowd, said: "It is stressful and overwhelming as there is a window period of only four hours to get the deals done."