The Ministry of National Development’s (MND) moves to cool the property market are the most far-reaching legislature to impact the property market since the anti-speculative measures of 1996. But what impact will these rulings have on you?
Weed out speculators
The government aims to eliminate property speculators from the market, rather than put off first-time buyers and genuine home occupiers, is the verdict of Dr Chua Yang Liang, head of research in South East Asia for real estate services firm Jones Lang LaSalle. Although, the measures were introduced later than expected, Dr Chua welcomes them ‘as the impact is more targeted at reducing speculative buying and not affecting occupier demand.’ He argues that this strategy promotes a healthier investment climate for the Singapore residential market in the longer term.
Li Hiaw Ho, executive director at multinational real estate corporation CBRE Research concurs. His reading of the legislature is that the new measures will mean ‘only those who have a strong cash position will be able to enter the residential market for investment purposes.’
Second-home Owners Beware
The increase in cash down payment – buyers of second homes must pay 10 per cent of the new home’s value in cash, up from 5 per cent – and the decrease in loan-to-value ratio – if you have an existing mortgage you can now only borrow up to 70 per cent of the property’s value, down from 80 per cent – are, in Mr Li’s opinion, aimed at discouraging property speculators from over-extending and finding themselves in financial difficulties.
First-time Buyer Bonus
One of the main beneficiaries, says Mr Li, are Singaporean first-time buyers with monthly household income of $8,000 - $10,000, as they can now buy DBSS flats – (public housing properties, which are designed, built and sold by private developers), as well as HDB’s Executive Condominium apartments – with a CPF housing grant of $30,000. However, Mr Li estimates that HDB ‘upgraders’ (public housing owners looking to upgrade to private properties) will shrink, as this group would now have to wait five years, instead of the previous three, before they can sell without now paying a punitive seller’s stamp duty.
HDB vs Private Home
The other major development is that an owner of private property, who buys a HDB flat, must then dispose of the private property within six months. Mr Mohamed Ismail, CEO of Singapore real estate agency, PropNex, believes that this ruling will have massive ramifications on the property market. ‘About 10% of all HDB resale purchases are by private property dwellers’ he says, and believes that this 10 per cent may be investors ‘who will now not be able to purchase HDB flats and keep their private property for investment purposes.’ Despite this, Dr Chua believes that private property prices are ‘unlikely to be adversely impacted, but could moderate to a more sustainable level of 2-3% per quarter going forward.’
The consensus appears to be that prices across private and public housing will moderate in the future, with developer’s sale volume now expected to come down and HDB expected to build 22,000 new flats in 2011. Upgraders and purchasers of second homes are likely to be hardest hit, along with more vulnerable property developers, while those with the means to purchase their first home, whether private or HDB, should not be adversely affected.
How does it affect you?
All the new measures and their probable impact on you, in this easy to read table.
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Comments:
anonymous said...
correct me if i'm wrong...
The last line of the 'First Time Buyer Bonus' paragraph, suggesting the SSD is 5 yrs instead of the previous 3 yrs.
Shouldn't it be 3 yrs ( current ) instead of the previous 1 yr ?
September 03, 2010 1:07:00 AM
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anonymous said...
Well, the property price sky high in Singapore ... and only the foreigners, PRs and rich and influential people wil be able to afford them.
Singaporean who has no property due to selling HDB too long ago and unable to pay for the HDB cummulative levy, worrying about terminal disease of spouse and still having education to worry, no job due to age ... will the property market ever come down?
Tell the rich and influential about the average and poor people and they will think we are from another planet.
August 31, 2010 7:35:00 PM
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anonymous said...
This story was out yesterday. OLD NEWS. You need to be more up to date.
August 31, 2010 4:08:00 PM
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