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|21 February 2010
Singapore government moves to cool property market
With the spectre of a property bubble looming after demand for private housing spiked sharply in January this year - following sharp price increases in the second half of last year - the Singaporean government moved swiftly on Friday to cool the market, according to the Today Online news website.
Although property observers were surprised by the timing of the two new measures announced at the end of the trading day, the Government said it preferred to introduce "calibrated measures now to temper sentiments" rather than be forced "to impose more drastic measures after a bubble has formed."
In its statement on Friday, the National Development Ministry (MND) said firstly, a stamp duty will be imposed on sellers for all residential properties and residential lands bought on Feb 20 and after, and sold within a year of purchase. This is aimed at speculators who flip their properties shortly after purchasing it. Previously, only buyers had to pay stamp duties, which range from 1 to 3 percent of the purchase price.
Secondly, financial institutions (FIs) may only extend loans of up to 80 percent of the value of the property - down from the 90 percent loan-to-value limit allowed previously. This will apply to all housing loans given by banks and other FIs, but not to those granted by the Housing and Development Board (HDB). But this is unlikely to affect many buyers, as according to MND, fewer than one in 10 buyers are currently granted housing loans exceeding 80 percent of loan-to-value.
Both measures which take effect on Saturday, come just five months after the last round of measures aimed at cooling the overheating property market.
Property analysts said the timing of the announcement signals the flexibility the Government has given itself to roll out more measures in the coming months should the property market keep heating up.
"Here, we're dealing with a creature that evolves with every property upturn. So what the Government could do is ... administer a certain remedy and then they wait and see whether that medicine has taken effect," said property lecturer Nicholas Mak of Ngee Ann Polytechnic.
Deputy chairman of the Government Parliamentary Committee for National Development Lee Bee Wah however felt more could be done, saying she "would like to see a more targeted measures to address the concerns of HDB buyers".
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