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Singapore moves to cool down resurgent property market
SINGAPORE, July 6, 2018 (BSS/AFP) – Singapore raised buyers’ fees and
tightened loan requirements from Friday to cool a resurgent property sector,
warning that rising prices could be destabilising amid climbing interest
rates.
Private residential prices in the affluent city-state have surged by 9.1
percent over the past year on strong demand after declining gradually for
close to four years, the government said.
A statement, issued jointly by the central bank and the ministries of
finance and national development, warned that the rise in property prices
must not “run ahead of economic fundamentals”.
Allowing prices to surge unchecked could “raise the risk of a
destabilising correction later, especially with rising interest rates and the
strong pipeline of housing supply,” the statement added. The government
raised by 5.0 percentage points the additional buyer’s stamp duty (ABSD), a
fee applied to the purchase price or current market value of a property, for
Singapore citizens and permanent residents buying a second and subsequent
house.
Citizens buying a third home and permanent residents buying a second home
will now pay 15 percent in ABSD fees.
Foreign individuals buying any residential house must pay 20 percent and
foreign entities 25 percent.
The loan-to-value limits for property purchases were also tightened by
five percentage points.
“The revision to ABSD rates is likely to lead to a slowdown in the
recovery of the private property market,” said Lewis Ng, chief business
officer of industry specialist PropertyGuru Group.
For example, a person looking to buy a second unit worth Sg$1.0 million
(US$733,000) will have to pay an additional Sg$50,000 in cash, and a total
stamp duty outlay of Sg$144,600, he said.
DBS Bank said the new cooling down measures caught the market by surprise.
But Ng said that “while this might be painful for home-seekers in the
short term, it will enforce financial prudence and create a more stable
property market”.
Most Singaporeans and residents live in high-rise government-built
apartment blocks or private condominiums.
The main Straits Times Index was down 2.22 percent after midday Friday,
with property stocks among the top decliners.
BSS/AFP/HR/1145