Just wanted to share with you the government’s take on the increasing property prices for both private and Hdb Resale this year. It is widely expected that they will place some form of cooling measures this month or the next.
Here are the types of cooling measures they can choose to implement
Extend the minimum occupation period (MOP)
This is more for those interested in buying a new BTO in a prime estate. Don’t think it will affect those buying HDB Resale and definitely not the private property purchaser.
Impose minimum size for each dwelling unit, or increasing the minimum average size for each project.
Actually this has already been done from 2019 onwards. For all new properties, the minimum size for all houses has been revised to 85sqm or 915 sqft. For areas such as Telok Kurau, Kovan, Joo Chiat as well as Jalan Eunos, the minimum size is 100 sqm or 1076 sqft
What the government is trying to do is reduce the number of small shoebox unit. What they don’t want is another Hong Kong situation. Check this link for more details
What does that mean for you as a first time private property buyer? The good thing is that your first home would be bigger in size. The bad thing is you probably need to fork out more for your first property purchase.
If you own a property that is smaller than 85sqm. Congratulations, your property will naturally increase in value because those that cannot afford the newer larger properties, will look for your property so that they can afford a property of their own.
Imposing a capital gains tax or increasing higher ABSD (Additional Buyer’s Stamp Duty) rate
More for seasoned investors, they can introduce a tax on your profit that you gain when you flip your property (The Singapore government doesn’t do that for now) or they can just increase the additional buyers stamp duty if you already own one private property and plan to buy more (currently the highest tax rate goes up to 20% for foreigners, check with me to see which category you are in)
Lowering LTV (Loan to Value) rates, TDSR (Total Debt Servicing Ratio) or Mortgage Servicing Ratio (MSR)
Probably affecting all aspiring property owners. They have already done it once before. LTV was reduced from 90% (20 Feb 2010) to 80% to 75% (6 July 2018).TDSR was introduced in 29 June 2013 to capped home loans to 60% of your income and where they introduced the MSR for Executive condominiums on 9 December 2013
For a more comprehensive timeline check out
Extend five year deadlines for developer
More for the developers. Slow down the rate of new launches and space themselves out. Personally, don’t think this will work because where the new launches enters in the real estate cycle is important. Launching just before the cycle starts to go into recession is probably not the best idea.
Regulate agents commissions
Hmm. Might or might not work. Leave it up to the agents and the buyers to discuss among themselves. But what is a good thing that could come out would be agents introducing properties that are suitable for their buyers instead of just pushing them to those developers who give the highest commissions.
Increasing Government Land Supply
Good idea! Increasing supply will allow more property to be purchased at a better pricing which leads to better new launch prices! This is a win win for all!
The link to the original article from the Business Times Singapore is here
Anyway, these are just my personal thoughts. Let me know if you have any questions or would like to know further about how this cooling measures might affect you in purchasing your next property.
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