Feb 22, 2010

Two new measures have been introduced by the government in an attempt to prevent a bubble from forming in the private homes sector and to cool the property market. These measures came into effect on Saturday.

The measures will make it more expensive and difficult for speculators to acquire and flip properties. All residential land and properties purchased and sold within a year from the purchase date will be imposed with a Seller's Stamp Duty.

The housing loan limit will also be capped at 80 percent - lower than the current 90 percent.

This new limit for loans will apply to all housing loans provided by financial institutions for executive condos, HUDC flats, private homes and HDB flats, including those sold under the Design, Build and Sell Scheme. However, loans granted by HDB for flats, will still have a cap of 90 percent.

The government introduced anti-speculative measures in September last year to cool the private homes market. Although these measures were initially effective, signs of property fever were emerging in the market again.

The new measures come as rising demand for private homes persists. In January, the number of units sold by developers was triple the volume sold in December. It was also the highest monthly total sales recorded since September 2009.

The Ministry said that these measures are aimed to discourage short-term speculative activity which could distort underlying prices. It is not targeted at the acquisition of properties for longer term investment or owner occupation.

The measures are the easiest to implement, without causing the market to come to a standstill, said market watchers.

“We are recovering. The economy is recovering and the market is picking up so what they want to do is to make sure the property market is moving up in tune together with the economy and not faster than the economic recovery,” said Eugene Lim, associate director of ERA Asia Pacific.

The volume and prices of private properties are not likely to be significantly affected by these measures, added the analysts.

“It has got a fairly minimal impact to the market, mainly because a lot of investors from our records are buying for the medium term, at least for a period of two to three years,” said Donald Han, managing director of Cushman and Wakefield.

“Some investors will probably stand by the sidelines and see how sales progress into February and March. It will take some wind out of the market; potentially it could be around 10-15 per cent in terms of the numbers of new home sales taken out of the equation.”

According to the Real Estate Developers' Association of Singapore (REDAS), the reduced mortgage limit is not likely to have a significant effect on investors and buyers, as the aftermath of the global fiscal crisis has already forced lending institutions to be more prudent.

The government has announced the following measures to ensure a stable and sustainable property market, to take effect from 20 Feb 2010:

a. Introducing a Seller's Stamp Duty (SSD) on all residential properties and residential lands that are bought from 20 Feb 2010 and sold within 1 year from the date of purchase; and

b. Lowering the Loan-to-Value (LTV) limit to 80% for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore (MAS).



The SSD will not be applicable to HDB flats (including flats sold under the Design, Build and Sell (DBSS) Scheme), as they are already subject to a minimum occupation period of at least one year. It will apply to Executive Condominiums and HUDC flats that are purchased on the resale market, as they are not subject to a minimum occupation period.


The 80% LTV limit will apply only to housing loans taken from banks/financial institutions, for transactions where the Option to Purchase(OTP) was granted on or after 20 Feb 2010, or if there is no OTP, where the date of the sale and purchase agreement falls on or after 20 February 2010.Housing Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90%.

PRESS RELEASE:Details of the measures are in the attached Press Release: