Government announces new measures to cool the private residential and HDB resale markets

[ASEAN NOW News]

 

SINGAPORE: The Government on Wednesday (Dec 15) announced a package of measures to cool the private residential and HDB resale markets.

 

According to CNA, the measures include raising Additional Buyer’s Stamp Duty (ABSD) rates, tightening the Total Debt Servicing Ratio (TDSR) threshold, and lowering the Loan-to-Value (LTV) limit for loans from the Housing and Development Board (HDB), said the Ministry of Finance, the Ministry of National Development, and the Monetary Authority of Singapore in a joint press release.

 

"The Government has been closely monitoring the property market for several quarters," said the statement, which was released to the media just before 11.40pm. It added that the private residential and HDB resale markets have been buoyant, despite the economic impact of COVID-19.

 

Private housing prices have risen by about 9 per cent since the first quarter of 2020.

 

HDB resale flat values have also risen by about 15 per cent since the same time, reversing a six-year decline, the authorities said.

 

"Even though House Price-to-Income ratios remain below their historical averages, there is clear upward momentum. Amid the low interest rate environment, transaction volumes in the private housing market and HDB resale market have also been high despite the COVID-19 situation."

 

"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."

 

The measures to cool the private and public housing markets are meant to "promote continued housing affordability". 

 

The agencies said that the measures for private residential are calibrated to dampen broad-based demand, especially from those purchasing property for investment rather than owner occupation.

 

The measures to tighten financing conditions for both public and private housing "will encourage greater financial prudence".

 

The Government also will increase public and private housing supply to cater to demand. 

 

Higher Stamp Duty

 

The current ABSD rates for Singapore citizens and permanent residents purchasing their first residential property will remain unchanged at 0 per cent and 5 per cent, respectively. 

 

For these two groups, purchasing a second or a third and subsequent residential property will incur increased ABSD rates.

 

Singapore citizens will now pay an ABSD rate of 17 per cent for their second residential property, and 25 per cent for their third and subsequent residential property. This is up from the previous rate of 12 per cent and 15 per cent, respectively.

 

The ABSD rates for permanent residents buying a second or a third and subsequent residential property has been increased to 25 per cent and 30 per cent respectively, up from 15 per cent.

 

Foreigners and entities will also incur more ABSD when purchasing any residential property.