Barely three months after the last round of measures to cool Singapore's “red-hot” property sector, the government introduced its seventh, which according to Maybank Kim Eng, might well be the most comprehensive. All measures took effect on Jan 12.
The report Singapore Property: Not Quite in Seventh Heaven said “while the possibility of new measures was largely anticipated by the market, the timing was somewhat of a surprise.”
The move came after the largest quarterly jump in private home prices of 1.8% compared with the previous quarter. On a monthly basis, the city state's private home sales jumped nearly 30% in December from the previous month, Reuters reported. Developers sold 1,410 housing units last month excluding executive condominiums, up from 1,087 units in November, according to data from the Urban Redevelopment Authority.
National Development minister Khaw Boon Wan said these measures, coupled with supply situation, would ensure housing remains affordable to Singaporeans.
While the measures, viewed as “pre-emptive” by analysts, are temporary, they would be in force as long as the government deems them necessary to cool the market, which are very much “investment driven,” a Credit Suisse report said.
This latest initiative was led by the Finance, National Development and and Trade and Industry ministries, Credit Suisse said.
The move is likely to send the private property market into “deep freeze over the next two-three months”, the high-end segment into “intermission” with the worst hit being the mass market. This means henceforth, underlying demand will be from the first-time homebuyers.
The government's salvo is also “unlikely to be its last” in the current low interest rate environment. The move followed estimates indicating that private residential property prices rose 2.8% in 2012 even as the economy only grew by 1.2%, Maybank Kim Eng said.
This latest slew of measures cover higher additional buyer's stamp duty across the board except for Singaporeans buying their first house, higher cash down payment and loans of up to only 40%, from the previous 30%, for certain individuals.
The measures affect Housing Development Board (HDB), executive condominium developments and industrial properties as well as the rental market.
“Permanent residents who own an HDB flat must sell that flat within six months of purchasing a private residential property in Singapore. ... the impact of this measure is quite limited for now, as PRs only accounted for 17% of all private non-landed property caveats lodged in 2012, of which we can only estimate that less than half actually own HDB flats,” said the Maybank Kim Eng report.
The percentage of foreign non-PR homebuyers remained fairly stable at 7% in each quarter last year, accounting for less than 10% of the transactions for properties priced below S$18,000 per sq m. Public discontent with oversized units has also resulted in built-up areas to be capped.