Latest property curbs aimed at reining in en bloc sales and speculative purchases

The latest round of property cooling measures seemed to be mainly aimed at taming the collective sale fever.

Brookvale Park. Picture: iProperty

Stamp duty hikes targeted at en bloc market

While there were stamp duty hikes implemented for buyers and developers, it is the latter who will be hit the hardest.

As of last Friday, developers will have to pay a 10 percentage point hike, from 15% to 25%, in additional buyer’s stamp duty (ABSD) unless they fulfill conditions laid out such as selling their units within a prescribed period.

In light of the new measures, developers are also likely to reconsider purchasing larger land sites.

At the end of the last work week, developers were going all out with launches to entice buyers to close deals before the new measures take effect.

For buyers who have exercised their Option to Purchase (OTP) on or before 5 July 2018, and if no variations have been made on or after 6 July 2018.

For these cases, the previous ABSD rates will stand if the OTP is exercised is made within 3 weeks from 6 July 2018 of the OTP validity period, whichever is earlier.

Consumers buying for investment will find it harder to secure loans

Private home prices have climbed steadily over the last 4 quarters and are now just 3.6% below the last peak in 2013. Buyers who are purchasing units for investment purposes may be the most affected by this new measure.

For local and foreign buyers who are purchasing their first residential property, the stamp duty rates remain at 0% and 5% respectively.

Some industry experts are also concerned that these new regulations will mean buyers are only able to loan less from banks and will have to fork out more from the Central Provident Funds (CPF) for property purchases. This does not however apply to Housing Board (HDB) loans.

Will this move bring forward the tilting of the supply and demand scale?

The property cycle will reach a point when supply outweighs demand, but that may only happen in a few years’ time when new developments on land sites recently sold en bloc reach completion.

Related: Government tightens property cooling measures by raising stamp duties