Property Cooling Measures Singapore
Rounds of property cooling measures Singapore have introduced by Singapore government to avoid property bubbles or market over speculation. Many property investors can already feel the impact of such property cooling measures and it is also obvious to see the URA property price index started to tip down from late last year. Are you lost? For your convenience, this single post will share all the latest property cooling measures and related updates. Do note that some of these property cooling measures are temporary though they are significant. They will be further reviewed by the government based on the market conditions.
Property Cooling Measures – HDB Updates – 10 Mar 2014
- Median Cash Over Valuation (COV) hits eight year low of zero
- Cash-over-valuation (COV) figures will no longer be part of the negotiating process for Housing Development Board (HDB) resale flat transactions. Both buyers and sellers will now have to agree upon a price first before getting an official valuation. HDB will only accept valuations from the buyers after they have been granted an Option to Purchase by flat sellers.
Property Cooling Measures – HDB Updates – 2 Dec 2013
- Minister of National Development (MND), Mr. Khaw announces that after three years of ramped up supply, BTO supply will taper off from 2014.
- Since the supply and demand for public housing returns to normal, Housing Development Board (HDB) will be tapering off its construction programme beginning 2014
Property Cooling Measures – HDB Updates – 29 Aug 2013
HDB cooling measures are as follow:
1) More housing grant for HDB flats.
- Special Housing Grant of up to $20,000 for four-room or smaller flats for household income ceiling has been extended to $6500 and $3250 for singles.
- Step-up grant of $15,000 for two-room flat owners moving to three-room flats in non-mature estates
2) Older set of parents under the Multi-Generation Priority Scheme can now opt for 3 room flats
3) New and larger three-generation flats will be piloted in Yishun starting from the next sales exercise!
4) HDB loans are reduced to 25 years instead of the 30 years and with repayments capped at 30% of the monthly income instead of 35%.
5) Bank loans for HDB Flats will be brought down from 35 years to 30 years.
6) PRs will have to wait for 3 years before they are allowed to purchase a resale HDB.
Property Cooling Measures – 29 Jun 2013
The most severe property cooling measure (Round 8) is the Total Debt Service Ratio (TDSR) framework which was introduced on 29 June 2013 by The Monetary Authority of Singapore to curb property speculation in Singapore. This is to impact all property loans granted by financial institutions (FIs) to individuals and will require FIs to take into consideration borrowers’ other outstanding debt obligations when granting property loans. It will help strengthen credit underwriting practices by FIs and encourage financial prudence among borrowers. In the past, banks were all using Debt Servicing Ratio as a benchmark to assess loan applicants. This is a percentage of your total monthly financial commitments divided by your total monthly income. As of May 2014, TDSR seems to be considered as a long term cooling measure.
Property Cooling Measures (7th Round) – 12 Jan 2013
Property Cooling Measures – Round 7 was introduced by MND to further cool the residential market while attempting to discourage speculations in the industrial market. Such measures do not really impact first time Singaporean buyers but it does impact on Permanent Residents to certain extent.
For all residential properties,
a) Additional Buyer’s Stamp Duty (ABSD) rates will be:
i) Raised between five and seven percentage points across the board.
ii) Imposed on Permanent Residents (PRs) purchasing their first residential property and on Singaporeans purchasing their second residential property.
b) Besides tighter Loan-to-Value limits, the minimum cash down payment for individuals applying for a second or subsequent housing loan will also be raised from 10% to 25%.
c) Loan-to-Value limits on housing loans granted by financial institutions will be tightened for individuals who already have at least one outstanding loan as well as to non-individuals such as companies.
For Public Housing,
Below cooling measures are to further moderate the demand for HDB flats, have greater financial prudence among buyers and owner occupation requirement by PR buyers.
a) Tighter eligibility for loans to buy HDB flats:
i) MAS will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions at 30% of a borrower’s gross monthly income.
ii) For loans granted by HDB, the cap on the MSR will be lowered from 40% to 35%.
b) PRs who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.
c) PRs who own a HDB flat will be disallowed from subletting their whole flat.
For New Executive Condominium Developments,
Below property cooling measures are to ensure that ECs continue to serve as an affordable housing option for middle-income Singaporean families.
a) The maximum strata floor area of new EC units will be capped at 160 square metres.
b) Sales of new dual-key EC units will be restricted to multi-generational families only.
c) Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the ‘bonus’ GFA of a residential development and subject to payment of charges.
d) Developers of future EC sale sites from the Government Land Sales (GLS) programme will only be allowed to launch units for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.
For Industrial Property Market,
Seller’s Stamp Duty (SSD) on industrial property was introduced to discourage short-term speculative activity. Such activity could distort the underlying prices of industrial properties and raise costs for businesses. SSD rates which are detailed at IRAS Portal will be imposed on industrial properties and land bought and sold within three years of the date of purchase.
Property Cooling Measures Updates – Sep 2012
- Executive flat in Queenstown goes fora record S$1million.
- HDB decides to launch a record 27,000 BTO flats in 2012 up from the planned 25,000
Property Cooling Measures (6th Round) – 6 Oct 2012
Property Cooling Measures – Round 6 was introduced on 6 October 2012 by Monetary Authority of Singapore to restrict the loan tenure for residential properties so as to avoid a property price bubble and to foster long term stability in the local Property Market. The maximum tenure of all new residential property loans will be capped at 35 years. Additionally, the loans exceeding 30 years tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats. This Singapore property measure aims to curb continued upward pressure on residential property prices, driven by low interest rates and rapid credit growth.
Property Cooling Measures (Round 5) – 8 Dec 2011
Property Cooling Measures – Round 5 was introduced in the midst of private property prices rising 13% above the peak in 2nd quarter 1996 and 16% above the more recent peak in 2nd quarter 2008. Additional Buyer’s Stamp Duty (ABSD) was introduced to moderate property investment singapore demand for private residential property especially on certain categories of residential property purchases. ABSD will apply to the higher of the purchase price or market price of the property and it will be imposed on top of the existing Buyer’s Stamp duty in the below scenario:
a) Foreigners and non-individuals (corporate entities) buying any residential property will pay an ABSD of 10%;
b) Permanent Residents (PRs) owning one and buying the second and subsequent residential property will pay an ABSD of 3%; and
c) Singapore Citizens (Singaporeans) owning two and buying the third and subsequent residential property will pay an ABSD of 3%.
Property Cooling Measures (4th Round) – 14 Jan 2011
Property Cooling Measures – Round 4 was introduced with the objective to ensure a stable and sustainable property market where prices move in line with economic fundamentals. Due to the sentiments remain buoyant that coupled with low interest rates plus excessive liquidity, the Government has decided to introduce four Singapore property measures to cool the property market and encourage greater financial prudence among property purchasers. They are listed below :
a) Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years to four years;
b) Raise the SSD rates to 16%, 12%, 8% and 4% of consideration for residential properties which are bought on or after 14 January 2011 and are sold in the first, second, third and fourth year of purchase respectively;
c) Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from 70% to 60% for property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase.
d) Lower the Loan-To-Value (LTV) limit to 50% on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals; and
Property Cooling Measures (3rd round) – 30 Aug 2010
Property Cooling Measures – Round 3 was introduced to make more costly to own investment properties and harder to flip property for profit. They are listed below:
a) Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.
b) For property buyers who already have one or more outstanding housing loans at the time of the new housing purchase:
i. Increase the minimum cash payment from 5% to 10% of the valuation limit; and ii. Decrease the Loan-to-Value limit for housing loans granted by financial institutions regulated by MAS to these buyers from the current 80% to 70%.
Property Cooling Measures (2nd round) – 20 Feb 2010
Property Cooling Measures – Round 2 was introduced by Singapore Government. Two property cooling measures listed below are to achieve the same objectives of Round 1
a) Lowering the Loan-to-Value (LTV) limit to 80% for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore (MAS)
b) Introducing a Seller’s Stamp Duty (SSD) on all residential properties and residential lands that are bought after today and sold within 1 year from the date of purchase
Property Cooling Measures (Round 1) – 14 Sep 2009
Property Cooling Measures – Round 1 was introduced By Ministry of National Development. They include three Singapore property measures listed below are to ensure a stable and sustainable property market :
a) In-statement of the Confirmed List for the 1st Half 2010 Government Land Sales (GLS) Programme.
b) Non-extension of the Jan 2009 Budget assistance measures for the property market when the measures expire.
c) Removal of the Interest Absorption Scheme (IAS) and Interest-Only Housing Loans (IOL), with effect from this date.