Tag Archives: cooling measures

MOF press release on measures with residential property

Ministry of Finance (MOF) has issued a joint press release with MND and MAS with regard to property measures.

1. Additional Buyer’s Stamp Duties (ABSD) and Loan to Value (LTV) Limits

The Government is therefore retaining the current ABSD rates and LTV limits.

2. Seller’s Stamp Duties (SSD)
The SSD is currently payable by those who sell a residential property within 4 years of purchase, at rates of between 4% and 16% of the property’s value

The Government will therefore revise the SSD as follows:

a) Impose SSD on holding periods of up to 3 years, down from the current 4 years; and
b) Lower the SSD rate by four percentage points for each tier. The new SSD rates will range from 4% (for properties sold in the third year) to 12% (for those sold within the first year).

The new SSD rates will apply to all residential property purchased on and after 11 March 2017. Details of the revised SSD rates are in the Annex.
Existing and new Seller’s Stamp Duty (SSD) rates for residential properties

SSD Rates on the actual price or market value based on date of purchase or date of change of zoning/use
14 Jan 2011 to 10 March 2017 (both dates inclusive) On and after 11 March 2017
Holding Period Up to 1 year 16% 12%
More than 1 year and up to 2 years 12% 8%
More than 2 years and up to 3 years 8% 4%
More than 3 years and up to 4 years 4% No SSD payable
More than 4 years No SSD payable

3. Total Debt Servicing Ratio (TDSR)

MAS will no longer apply the TDSR framework to mortgage equity withdrawal loans with LTV ratios of 50% and below.

4. Stamp Duties on Transfer of Equity Interest in Entities whose Primary Tangible Assets Are Residential Properties in Singapore

The 2nd Minister for Finance will be introducing legislative changes in Parliament today aimed at treating transactions in residential properties on the same basis irrespective of whether the properties are transacted directly or through a transfer of equity interest in an entity holding residential properties. Significant owners of residential property-holding entities or PHEs will be subject to the usual stamp duties when they transfer equity interest in such entities, similar to what would happen if they were to buy or sell the properties directly.

 

Interactive Chart on Property market impacts

http://www.straitstimes.com/news/business/more-business-stories/story/interactive-charts-impact-singapores-property-cooling-meas

Recent cooling measures have clipped the wings of the once-soaring private property market in Singapore.

Tough measures such as a total debt servicing framework, which restricts a borrower’s monthly debt repayments to at most 60 per cent of his gross monthly income, has driven some buyers to aim for smaller homes with cheaper total prices.

This interactive Chart by Straits Times gives a macro view at how private home sales and prices have changed with each round of curbs

Property Investors now look increasingly to Office and Retail Segments

http://www.businesstimes.com.sg/premium/singapore/office-retail-segments-lure-investors-20140813

LED by rising rents and limited supply in the near-term, investment activities are expected to hold up for office and retail space. The absence of additional buyer’s stamp duty (ABSD) and seller’s stamp duty (SSD) in the commercial space is also making this segment more appealing to investors.

Knight Frank executive director Mary Sai noted that the Singapore retail and office markets are among top picks in Asia for foreign investors, who face heftier ABSD than locals in the residential market.

“Robust economic growth, stable government, low unemployment, strength of Singapore dollars, are some compelling pull factors for foreign investors in our commercial properties,” she said at the National Real Estate Congress yesterday.

“Another reason why people move over to commercial property is because the absolute sum of capital to be paid is affordable,” Ms Sai added, citing the example of Alexandra Central, which had 43 per cent of transactions below S$1 million. The project that was launched in January last year had 98.3 per cent of strata-titled retail space sold out within one day.

Why cooling measures are not removed yet: rise in caveats in Q2

Here’s a possible reason why the authorities are not inclined to remove any property cooling measures just yet: There was an across-the-board increase in caveats lodged for private home purchases in the second quarter compared to the previous quarter.

DTZ’s analysis of URA Realis caveats database shows a 37.1 per cent quarter-on-quarter increase in the total number of private homes transacted to 3,369 units in Q2.

A segmental breakdown showed that the number of units picked up in the resale market climbed nearly 41 per cent or 386 units to 1,328 units in Q2 from 942 units in Q1 – ending three consecutive quarters of decline.

New sales by developers too rose by 511 units or 36.8 per cent to 1,898 units. In the subsale market, 143 units changed hands in Q2, up 11.7 per cent from Q1.

http://katonghomes.com/2014/07/24/possible-reason-why-cooling-measures-not-removed-rise-caveats-in-q2/

Total Debt Servicing Ratio (TDSR) impact to date

http://www.channelnewsasia.com/news/singapore/taking-stock-of-the-total/1194772.html

The Total Debt Servicing Ratio (TDSR) was introduced in June 2013 to ensure financial prudence among borrowers and strengthen credit underwriting practices among banks. The ratio determines how much an individual can borrow from the banks.

Under it, total monthly debt payments including home and car loans cannot exceed 60 per cent of the property buyers’ income. These debt payments are wide-ranging and can include home and car loans, study loan, and even credit card debts.

In the private residential market, the impact of the TDSR on sales volume quickly became apparent. There were 482 new units bought in July 2013, a drop of 73.3% compared to 1,806 unit) in June 2013.

In total, 9,115 new homes were bought since the TDSR was implemented – that’s half the amount bought in a year-on-year comparison from Jul 2012 to May 2013.

Analysts we spoke to say the suburban homes were the hardest hit. Numbers compiled by Knight Frank Singapore showed that 63 per cent fewer new homes in the suburbs were bought in the second half of 2013, compared to the first half of the year.

As for prices, the effect of TDSR was seen later that year. The Urban Redevelopment Authority’s residential property price index slipped 0.9% in the fourth quarter of 2013, the first decline in almost two years.

Prices dipped again in the next quarter – this time by 1.3 per cent. making it the largest drop since the second quarter of 2009, when prices fell by 4.7 per cent.

In boosting sales, some developers have turned to cutting prices. One of the latest to join the fray is the Panorama condominium in Ang Mo Kio, which relaunched in May at a median price of about $1,241 per square foot.

That is about 8 per cent lower than the median price when it was first launched in January this year. But property watchers we spoke to say the discounts are typically for bigger or “less prime” units, and developers are unlikely to lower prices across their projects.

Developers may also be creating smaller units, to balance between offering palatable prices for buyers, and maintaining their profit margins. According to figures from CBRE, the median size of units in the suburbs declined from 753 square feet in the third quarter of 2013, to 732 square feet in the first quarter of this year.

The impact of the TDSR was also felt in the private residential resale market. CBRE’s numbers showed that sales volume in the secondary market dropped by 50 per cent in the first half of this year, compared to the same period last year.

But it may be increasingly difficult to find tenants, as the Government tightens its foreign labour controls and more new homes enter the market in the coming months.

The Urban Redevelopment Authority estimates that a total of 18,350 units will be completed this year, while another 21,738 units, excluding executive condominiums, are expected to be completed in 2015.