Following months of speculation by the industry amid a buoyant market, the government has introduced a new set of cooling measures that will take effect immediately.
The last set of cooling measures were introduced back in July 2018.
Among others, the additional buyer’s stamp duty for the second residential property bought by Singapore citizens, has been raised to 17% from 12%. For the third and subsequent properties bought by Singaporeans, it is now 25%, up from 15%.
Permanent residents buying their first property will continue to pay 5% ABSD. For their second purchase, the rate will now be 25%, up from 15%; for their third and subsequent properties, they now got to pay an ABSD of 30%, double the previous rate of 15%.
As for foreign buyers, anything they buy will attract an ABSD of 30%, up from 20% previously.
So-called "entities", which generally refers to buying made by companies, now pay 35%, up from 25%.
Tighter TDSR
In addition, there’s now a tighter total debt servicing ratio of 55%, from 60% previously.
The government notes that both the private residential and HDB resale markets have been buoyant, despite the economic impact of Covid-19.
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Since 1Q2020, private housing prices have increased by 9%; HDB resale flat prices up 15% over the same period - following a six-year decline.
In a joint statement, the Ministry of National Development (MND), the Ministry of Finance and the Monetary Authority of Singapore note that even though House Price-to-Income ratios remain below their historical averages, there is clear upward momentum.
Transaction volumes have also remained high despite the pandemic.
“If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years," according to the joint statement.
“The government has therefore decided to implement a set of measures to cool the private and public housing markets, to promote continued housing affordability,” the government adds.
The private residential measures are calibrated to dampen broad-based demand, especially from those purchasing property for investment rather than owner occupation.
Measures to tighten financing conditions for both public and private housing will encourage greater financial prudence.
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The government will also be ramping up the supply for both private and public housing.
