More property market measures announced
By Mustafa Shafawi, Wayne Chan | Posted: 13 January 2011 1823 hrs
SINGAPORE: The government has announced more measures to maintain a stable and sustainable property market.
From Friday, the holding period for imposition of Seller’s Stamp Duty (SSD) will be raised to four years from the current three.
The SSD rates would also be raised while the Loan-To-Value (LTV) limit would be lowered to 50 per cent on housing loans for property buyers who are not individuals.
The LTV limit would also be lowered to 60 per cent for individual property buyers with one or more outstanding housing loans.
The government said its objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals.
Analysts said they believe the measures could further curb speculation in the market.
Research Consultancy SLP International executive director Nicholas Mak said: “This is going to basically drive another nail into the coffin of anybody who has thoughts of short-term investments — in other words speculation in the property market.
“This is quite a drastic measure to try to drive out short-term investors because by raising the Seller’s Stamp Duty to a very punitive rate of eight per cent and above basically creams off all the profits that a short-term investor hopes to gain”.
Chesterton Suntec International head of research and consultancy Colin Tan said he was surprised at the timing of the new measures.
“I think everyone recognises that the liquidity problem is a global one and that the measures are meant to inject some sanity at certain points in time,” he said.
“I think everybody (had) never expected them to last very long but apparently it’s so strong that they feel that maybe quite soon, after August 30, they need to act again.
“The message sent here is pretty strong. I think for a while the market should cool down.”
Previous measures have, to some extent, moderated the market, but sentiments remain buoyant.
It said 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.
Therefore, the government said it has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence among property purchasers.
It said there’s an ample supply of private residential units, and buyers need not rush to buy now.
It added it would continue to ensure an adequate supply of housing to meet demand.
The government also said it would continue to monitor the property market closely and take further steps to promote a stable and sustainable property market if necessary.
Prospective buyers Channel NewsAsia spoke to welcomed the measures to cool the market and added they would be more cautious about their home purchase.
34-year-old Hemanta Kumar Banka, an IT professional, said: “People will try to hold back as much as possible until there is a real need because the amount of tax which is there is not a small amount – it’s a big chunk …
“Spending like a 10 per cent, a 12 per cent is not a small amount, so those are good cooling measures which are going to help bring the property market down.”
Account executive Lim Nyuk Khim, 24, said: “Definitely good for us, especially for first time buyers. Because for investment purposes, if I am going in for a fast buck, I actually would have to pay more.”