14-01-2011, 07:34 AM
Latest set (4th) of cooling measures announced by the Govt. Will they work? 
Business Times - 14 Jan 2011
New steps rain on speculators' parade
Big hike in seller's stamp duty and mortgage restrictions to cool property market
By UMA SHANKARI
(SINGAPORE) Starting today, speculators in the Singapore property market will find their ardour cooled by a severe new regime. The seller's stamp duty for private homes will rise to as high as 16 per cent, from up to 3 per cent previously, while tighter mortgage restrictions will be put in place.
The government yesterday unveiled a new and stronger round of demand-side cooling measures - the third set in less than 12 months.
The killer move, according to analysts, is a sharp hike in the seller's stamp duty to 16 per cent, 12 per cent, 8 per cent and 4 per cent respectively for properties that are bought on or after Jan 14 this year and are sold in the first, second, third and fourth year after purchase.
Previously, owners who sold houses and apartments less than three years after buying them had to pay a seller's stamp duty of only up to 3 per cent.
Singapore also further slashed the Loan-To-Value (LTV) limit on housing loans for both individual and corporate buyers.
Its move follows Hong Kong's, which in late November 2010 announced some of its toughest-ever measures to cool the property market - including a stamp duty of as high as 15 per cent on apartments sold within six months of purchase. Hong Kong also tightened mortgage restrictions.
Analysts expect the higher seller's stamp duty will wipe out most speculators' gains and keep them out of Singapore's property market.
'For those buyers who intend to flip their properties within one or two years, the increased seller's stamp duty erases their potential gains,' said Merrill Lynch economist Chua Hak Bin. 'So this measure is pretty targeted and will take away a big chunk of these potential investors.'
But most analysts found the unexpected sharp hike in the seller's stamp duty to be harsh. In addition to hindering short and medium-term investors, it could also hurt genuine owner-occupiers looking to change homes.
International Property Advisor chief executive Ku Swee Yong said that a staggered-down capital gains tax - one that could perhaps be imposed only on capital gains from real estate - might have been more advisable. This would spare those who sell their properties at a loss.
'The government's intention of forcing people to treat real estate as a long-term investment is admirable,' said Mr Ku. 'But this (the higher seller's stamp duty) will force people to hold, including some genuine cases where there might be a real need to sell off a property.'
In addition, Singapore lowered the LTV limit on housing loans from 70 per cent to 60 per cent for individual buyers with one or more outstanding housing loans at the time of the new home purchase.
And for corporate purchasers (such as firms, trusts and collective investment schemes), the LTV limit has been cut to an even lower 50 per cent - regardless of the number of outstanding housing loans at the time of the new home purchase.
In August 2010, the government reduced the LTV ratio from 80 per cent to 70 per cent.
Yesterday's measures follow three gentler sets in September 2009, and February and August 2010.
'Previous government measures have to some extent moderated the market, but sentiment remains buoyant,' said the National Development and Finance Ministries in a joint statement with Singapore's central bank, the Monetary Authority of Singapore.
'Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals.'
Private home prices rose 17.6 per cent last year, according to flash estimates. A record 15,500-16,500 new private homes are also estimated to have been sold in 2010.
In a statement, the Real Estate Developers' Association of Singapore (Redas) said it has 'taken note' of the latest measures.
The measures will discourage speculative demand and will encourage longer-term holding of properties which will contribute to the stability of the market, Redas said: 'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors.'
Merrill Lynch's Dr Chua also said that in addition to curbing speculators, the government could be concerned by aggressive mortgage lending by banks.
Analysts expect the volume of new home sales to fall in 2011 but were spilt on whether the new measures will cause private home prices to decline.
'There will be a sense of uncertainty in the market leading to hesitation among buyers and sellers and we can expect to see transactions easing in the short term,' said Credo Real Estate executive director Ong Teck Hui.
But the measures may not lead to an immediate price decline in Q1 2011, he said. This round of measures is still not as severe as the anti-speculation measures announced in May 1996, which resulted in a 1.9 per cent drop in prices in Q3 1996. But any upside in prices in Q1 2011 will be 'minimal', Mr Ong added.
But in any case, analysts said that the 5-10 per cent growth in private home prices for the whole of 2011, which they predicted just one week ago, now looks highly unlikely. They also expect property stocks to fall today in reaction.
----------------------
The Straits Times
Jan 14, 2011
new property curbs
New measures to curb property speculation
Govt steps in for fourth time in two years, catching many by surprise
By Esther Teo
A CHILL is set to descend on Singapore's property market after the Government unveiled tough new measures yesterday that analysts say will effectively kill off short-term speculation and make most property investors look before they leap.
They include hiking seller's stamp duty to a new maximum of 16 per cent, up from 3 per cent previously, and making it payable for up to four years from the date of purchase of a property.
Anyone with an existing home loan looking to buy a second property for investment will also now need to fork out more cash and Central Provident Fund savings.
That is because the loan limit for such properties is now 60 per cent of the property's value, down from 70 per cent previously.
The measures take effect today.
Yesterday's announcement marked the fourth time in less than two years that the Government has stepped in to cool the property market here.
It caught many by surprise, since it comes barely five months after tighter financing and ownership rules were announced on Aug 30 last year.
In its statement, the Government said that while these previous measures had to some extent moderated the market, sentiment remained buoyant.
'Low interest rates plus excessive liquidity in the financial system - both in Singapore and globally - could cause prices to rise beyond sustainable levels based on economic fundamentals,' it added.
'Moreover, when interest rates eventually rise, it could strain purchasers who have over-extended themselves financially.'
Even as the Government moved to temper exuberance in the market, homes were flying off the shelf.
Local developer Oxley Holdings separately announced yesterday that its 41-unit Loft@Holland condominium was sold out within two hours of its soft launch at prices from $1,630 per sq ft to $2,166 per sq ft.
'Demand was strong enough to require balloting to be conducted for all but two units,' it added. 'On average, there were about three interested buyers per unit.'
The seller's stamp duty was first introduced in February last year. Its impact is especially significant because it is payable regardless of whether the property is sold at a gain or loss.
The Government also introduced a new rule that will see institutions such as corporations, trusts and collective investment schemes face tighter financing rules.
The loan limit will be lowered to 50 per cent on housing loans granted to property purchasers of such types who are 'not individuals or natural persons'. There was no rule specific to this class of investors previously.
But these tighter rules will not apply to loans granted to property developers for en bloc sales or land zoned for residential purposes, the Monetary Authority of Singapore said.
Although the new measures have been introduced to cool the market in general and encourage greater financial prudence among home buyers, some property buyers will remain unaffected.
First-time buyers, as well as property owners without outstanding home loans, continue to be able to borrow up to 80 per cent of the value of the property.
Private home prices climbed 17.6 per cent last year as a record 15,025 new homes were sold in the first 11 months of the year.
A surfeit of liquidity and low borrowing rates have also fuelled concerns that asset bubbles are forming not just in Singapore but in regional economies like Hong Kong and China.
In November, Hong Kong announced some of its toughest-ever measures to cool the property market, applying a stamp duty of as high as 15 per cent on apartments sold within six months of purchase.
Downpayments for homes costing HK$12 million (S$2 million) or more also rose to 50 per cent, from 40 per cent previously.
Sounding shell-shocked, industry players said the market will probably react in a knee-jerk manner.
Buying interest will dry up initially and new property launches will slow down as the market digests the news.
Ms Tay Huey Ying, director of research and consultancy at Colliers International, expects home buyers to be on their guard, leading to a fall in sales volume in the short term before possibly recovering later.
She has revised her price growth forecast for this year down from 10 per cent to between 5 and 8 per cent.
The Real Estate Developers' Association of Singapore (Redas) said that the measures will discourage speculative demand and will encourage longer-term holding of properties, contributing to the stability of the market.
'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors,' it said.
Ms Valerie Lee, 24, a first-time buyer looking for a private home, welcomed the new measures, saying that property prices have remained out of her reach even after the Aug 30 measures were introduced.
'As a genuine buyer, I think it's a good move,' said the executive in a utility and energy company. 'The property price index is still going up, so hopefully these new measures will work and be substantial enough to keep speculators away. I'm hoping that prices will come down.'
esthert@sph.com.sg
Business Times - 14 Jan 2011
New steps rain on speculators' parade
Big hike in seller's stamp duty and mortgage restrictions to cool property market
By UMA SHANKARI
(SINGAPORE) Starting today, speculators in the Singapore property market will find their ardour cooled by a severe new regime. The seller's stamp duty for private homes will rise to as high as 16 per cent, from up to 3 per cent previously, while tighter mortgage restrictions will be put in place.
The government yesterday unveiled a new and stronger round of demand-side cooling measures - the third set in less than 12 months.
The killer move, according to analysts, is a sharp hike in the seller's stamp duty to 16 per cent, 12 per cent, 8 per cent and 4 per cent respectively for properties that are bought on or after Jan 14 this year and are sold in the first, second, third and fourth year after purchase.
Previously, owners who sold houses and apartments less than three years after buying them had to pay a seller's stamp duty of only up to 3 per cent.
Singapore also further slashed the Loan-To-Value (LTV) limit on housing loans for both individual and corporate buyers.
Its move follows Hong Kong's, which in late November 2010 announced some of its toughest-ever measures to cool the property market - including a stamp duty of as high as 15 per cent on apartments sold within six months of purchase. Hong Kong also tightened mortgage restrictions.
Analysts expect the higher seller's stamp duty will wipe out most speculators' gains and keep them out of Singapore's property market.
'For those buyers who intend to flip their properties within one or two years, the increased seller's stamp duty erases their potential gains,' said Merrill Lynch economist Chua Hak Bin. 'So this measure is pretty targeted and will take away a big chunk of these potential investors.'
But most analysts found the unexpected sharp hike in the seller's stamp duty to be harsh. In addition to hindering short and medium-term investors, it could also hurt genuine owner-occupiers looking to change homes.
International Property Advisor chief executive Ku Swee Yong said that a staggered-down capital gains tax - one that could perhaps be imposed only on capital gains from real estate - might have been more advisable. This would spare those who sell their properties at a loss.
'The government's intention of forcing people to treat real estate as a long-term investment is admirable,' said Mr Ku. 'But this (the higher seller's stamp duty) will force people to hold, including some genuine cases where there might be a real need to sell off a property.'
In addition, Singapore lowered the LTV limit on housing loans from 70 per cent to 60 per cent for individual buyers with one or more outstanding housing loans at the time of the new home purchase.
And for corporate purchasers (such as firms, trusts and collective investment schemes), the LTV limit has been cut to an even lower 50 per cent - regardless of the number of outstanding housing loans at the time of the new home purchase.
In August 2010, the government reduced the LTV ratio from 80 per cent to 70 per cent.
Yesterday's measures follow three gentler sets in September 2009, and February and August 2010.
'Previous government measures have to some extent moderated the market, but sentiment remains buoyant,' said the National Development and Finance Ministries in a joint statement with Singapore's central bank, the Monetary Authority of Singapore.
'Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals.'
Private home prices rose 17.6 per cent last year, according to flash estimates. A record 15,500-16,500 new private homes are also estimated to have been sold in 2010.
In a statement, the Real Estate Developers' Association of Singapore (Redas) said it has 'taken note' of the latest measures.
The measures will discourage speculative demand and will encourage longer-term holding of properties which will contribute to the stability of the market, Redas said: 'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors.'
Merrill Lynch's Dr Chua also said that in addition to curbing speculators, the government could be concerned by aggressive mortgage lending by banks.
Analysts expect the volume of new home sales to fall in 2011 but were spilt on whether the new measures will cause private home prices to decline.
'There will be a sense of uncertainty in the market leading to hesitation among buyers and sellers and we can expect to see transactions easing in the short term,' said Credo Real Estate executive director Ong Teck Hui.
But the measures may not lead to an immediate price decline in Q1 2011, he said. This round of measures is still not as severe as the anti-speculation measures announced in May 1996, which resulted in a 1.9 per cent drop in prices in Q3 1996. But any upside in prices in Q1 2011 will be 'minimal', Mr Ong added.
But in any case, analysts said that the 5-10 per cent growth in private home prices for the whole of 2011, which they predicted just one week ago, now looks highly unlikely. They also expect property stocks to fall today in reaction.
----------------------
The Straits Times
Jan 14, 2011
new property curbs
New measures to curb property speculation
Govt steps in for fourth time in two years, catching many by surprise
By Esther Teo
A CHILL is set to descend on Singapore's property market after the Government unveiled tough new measures yesterday that analysts say will effectively kill off short-term speculation and make most property investors look before they leap.
They include hiking seller's stamp duty to a new maximum of 16 per cent, up from 3 per cent previously, and making it payable for up to four years from the date of purchase of a property.
Anyone with an existing home loan looking to buy a second property for investment will also now need to fork out more cash and Central Provident Fund savings.
That is because the loan limit for such properties is now 60 per cent of the property's value, down from 70 per cent previously.
The measures take effect today.
Yesterday's announcement marked the fourth time in less than two years that the Government has stepped in to cool the property market here.
It caught many by surprise, since it comes barely five months after tighter financing and ownership rules were announced on Aug 30 last year.
In its statement, the Government said that while these previous measures had to some extent moderated the market, sentiment remained buoyant.
'Low interest rates plus excessive liquidity in the financial system - both in Singapore and globally - could cause prices to rise beyond sustainable levels based on economic fundamentals,' it added.
'Moreover, when interest rates eventually rise, it could strain purchasers who have over-extended themselves financially.'
Even as the Government moved to temper exuberance in the market, homes were flying off the shelf.
Local developer Oxley Holdings separately announced yesterday that its 41-unit Loft@Holland condominium was sold out within two hours of its soft launch at prices from $1,630 per sq ft to $2,166 per sq ft.
'Demand was strong enough to require balloting to be conducted for all but two units,' it added. 'On average, there were about three interested buyers per unit.'
The seller's stamp duty was first introduced in February last year. Its impact is especially significant because it is payable regardless of whether the property is sold at a gain or loss.
The Government also introduced a new rule that will see institutions such as corporations, trusts and collective investment schemes face tighter financing rules.
The loan limit will be lowered to 50 per cent on housing loans granted to property purchasers of such types who are 'not individuals or natural persons'. There was no rule specific to this class of investors previously.
But these tighter rules will not apply to loans granted to property developers for en bloc sales or land zoned for residential purposes, the Monetary Authority of Singapore said.
Although the new measures have been introduced to cool the market in general and encourage greater financial prudence among home buyers, some property buyers will remain unaffected.
First-time buyers, as well as property owners without outstanding home loans, continue to be able to borrow up to 80 per cent of the value of the property.
Private home prices climbed 17.6 per cent last year as a record 15,025 new homes were sold in the first 11 months of the year.
A surfeit of liquidity and low borrowing rates have also fuelled concerns that asset bubbles are forming not just in Singapore but in regional economies like Hong Kong and China.
In November, Hong Kong announced some of its toughest-ever measures to cool the property market, applying a stamp duty of as high as 15 per cent on apartments sold within six months of purchase.
Downpayments for homes costing HK$12 million (S$2 million) or more also rose to 50 per cent, from 40 per cent previously.
Sounding shell-shocked, industry players said the market will probably react in a knee-jerk manner.
Buying interest will dry up initially and new property launches will slow down as the market digests the news.
Ms Tay Huey Ying, director of research and consultancy at Colliers International, expects home buyers to be on their guard, leading to a fall in sales volume in the short term before possibly recovering later.
She has revised her price growth forecast for this year down from 10 per cent to between 5 and 8 per cent.
The Real Estate Developers' Association of Singapore (Redas) said that the measures will discourage speculative demand and will encourage longer-term holding of properties, contributing to the stability of the market.
'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors,' it said.
Ms Valerie Lee, 24, a first-time buyer looking for a private home, welcomed the new measures, saying that property prices have remained out of her reach even after the Aug 30 measures were introduced.
'As a genuine buyer, I think it's a good move,' said the executive in a utility and energy company. 'The property price index is still going up, so hopefully these new measures will work and be substantial enough to keep speculators away. I'm hoping that prices will come down.'
esthert@sph.com.sg
