Singapore Revises Measures to Cool Property Market

Source: Bloomberg

Singapore’s government announced Monday several measures to maintain a stable and sustainable property market. First, the holding period for the imposition of Seller’s Stamp Duty on residential properties sold will be extended from the current one year to three years.

Second, property buyers who already have one or more outstanding housing loans at the time of the new housing purchase will have to increase the minimum cash payment from 5 per cent to 10 per cent of the valuation limit. In addition, the Loan-to-Value limit for housing loans granted by financial institu- tions regulated by the Monetary Authority of Singapore to these buyers will be decreased from the current 80 per cent to 70 per cent.

These measures will take immediate effect on 30 August 2010.

The government said that its objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. It also noted that Singapore’s property market is currently very buoyant, with prices increasing by a significant 11 per cent in the first half of this year. Price levels in the market have now exceeded the historical peak in the second quarter of 1996, the government said.

According to the Urban Redevelopment Authority, Singapore’s private residential prices rose 38 per cent in the second quarter from a year earlier.

Singapore’s strong economic growth in the first half is expected to moderate in the second half. Should economic growth falter and the market correct, property buyers could face capital losses, the government said, adding that the revised measures seek to temper sentiments and encourage greater financial prudence among property purchasers.

Singapore joins China in introducing measures this year to cool their respective property markets amid concerns that asset bubbles are forming as home prices surge. “Most of the meas- ures are really targeting repeat buyers and speculators who buy and sell over the short term, which is now defined as within three years,” said Donald Han, a Singapore-based managing director at real estate adviser Cushman & Wakefield Inc.

CapitaLand Ltd, Southeast Asia’s biggest developer, dropped 1 per cent to S$3.96 as of 10:01 am in Singapore trading, while the benchmark Straits Times Index rose 0.7 per cent. City Develop- ments Ltd, the island’s second-largest developer by market value, fell 3.2 per cent to S$11.58, headed for its biggest decline since February.