Last Friday (11th Jan 2013) evening, the Singapore Government announced a sweeping 7th round of property cooling measures since 2009, with a series of policies including:
- Raising Additional Buyer’s Stamp Duty (ABSD) by 5%-7%
- Imposing ABSD on second homes for Singaporeans and first homes for permanent residents (PR)
- Lowering loan-to-value limits
- Increasing minimum cash payments to 25% (from 10% currently)
- Within the public housing segment, tighter loan requirements have been introduced, and restrictions regarding PR ownership of HDB flats and the development of Executive Condominiums have been implemented
- In the industrial space, the government will impose a Seller’s Stamp Duty (SSD) of between 5%-15% for the sale of industrial properties within 3 years of purchase
The new round of cooling measures does not come as a complete surprise, given that the Singapore government has repeatedly reiterated its intention to stabilize the residential and industrial markets. However, this round of measures is probably the most punitive and comprehensive set of cooling policies released thus far, and is likely to be effective in dampening both market sentiment and investment demand.
In my opinion, the new financing rules may have the biggest impact. As I have repeatedly expressed, “amateur” speculators are the one who pushed up the price and these people are always the most leveraged. That means when the tide goes out, these people will be in the most devastating state. Below is the summary of the new financing rules.