The objective of the comprehensive package of property cooling measures, according to the government, is “to ensure a stable and sustainable property market”.
Government intervention can definitely delay the onset of a bubble burst, making the market ‘sustainable’ for the time being.
As for ‘stable’, I don’t think this is what investors/speculators or real users want. The former wish prices will continue to go up while the latter want the other way round.
You may say it is just another government attempt to stem out speculation in the property market. But this time round, it may affect more people than just the target group.
This is similar to the scenario of carrying out a fogging exercise in the neighborhood for the purpose of pest control. It kills not only mosquitoes and flies, but also lizards, butterflies and other insects that have done no harm but have to sacrifice for a bigger cause.
With the new restrictions kick in, who are likely to be the unfortunate living things in the property ecosystem?
1) Developers, property agents and mortgage banks
Buyers are going to wait on the sidelines at least for the next few months. Fortunately, first quarter is usually a slow quarter that everyone expect disappointing results anyway. Blame it on the New Year and Chinese New Year!
2) Permanent Residents (PRs)
This is definitely bad news for PRs, especially for long-term staying PRs who have no intention to convert to Singaporeans or don’t seem to get approved for their Singapore citizenship. From now on, whatever they are going to buy, they are going to pay more than Singaporeans.
3) Public housing tenants
PRs are no longer allowed to sublet the whole HDB flat. In the forseeable future, less supply of HDBs for rent may result in higher rental rate for the tenants.
4) Public housing owners
Thanks to the lower cap on Mortgage Servicing Ratio at 30 to 35 percent of the borrower’s gross monthly income. Less people can afford the higher-priced HDB units. Large-size and relatively new HDB, BTO and EC units at rarely-found good locations now have a smaller pool of buyers.
5) The upgraders
Those who can afford the current skyrocketing prices would have already bought their home. The Additional Buyer’s Stamp Duty (ABSD), lower LTV and higher minimum down payment only make the target properties of the upgraders more unreachable.
6) Those who bought in the last three years
Cooling measures that kick in over the last three years mean higher transaction costs (ABSD, seller’s stamp duty) and reduced monthly return. Even if they can sell in the near future, with only a slight increase in property prices, the chance of them having a profit is slim. That’s why they can’t sell now and are stuck with an overpriced property.
Well, no matter what is going to happen in the property market, at least one party can benefit from the new round of cooling measures.
Here’s to the government. May you enjoy another prosperous year collecting more buyer’s and seller’s stamp duties!
Hi, I have paid up my HDB and have cash about $100k, with this new measures do you think that I should wait for the opportunity to invest in a condo?
It’s not about the new measures. $100K is too small a sum for a private property in today’s market.
You forgot the most important stakeholder and the real reason why the measures were implemented in the first place – PAP.
The by-election is coming and this latest salvo is to address the unhappiness of those Singaporeans who cannot afford to buy their properties.
Isn’t this already clear as a bell? Don’t think I have to mention it any more : )
When times are good, people complain that housing is not affordable. When property prices plunge during crises, people lament loss of wealth and job uncertainty. You can’t satisfy everyone during any point of time in an economic cycle. Any government in the world will only do so much to tide over to the next election.
You forgot the most important stakeholder and the real reason why the measures were implemented in the first place – PAP.
The by-election is coming and this latest salvo is to address the unhappiness of those Singaporeans who cannot afford to buy their properties.
Isn’t this already clear as a bell? Don’t think I have to mention it any more : )
When times are good, people complain that housing is not affordable. When property prices plunge during crises, people lament loss of wealth and job uncertainty. You can’t satisfy everyone during any point of time in an economic cycle. Any government in the world will only do so much to tide over to the next election.
Not good enough. Drips and draps band-aid twits will just push the wits to game the market in other ways. As the doc will say, good ole bitter medicine that checks the cause and cleans the soul is better many times than the sweet ones that go after the symptoms; in short they should have just put in permanent place a simple progressive (inverse to time held) capital gain tax instead of all these mumbo-jumbo bits.
You are right that capital gain tax is most effective in curbing property speculation. If it is implemented right at the beginning when prices start picking up, it will probably have a hard braking effect on the boom (which is what the government doesn’t want to see).
Capital gain tax works best only when prices climb rapidly in a straight line. With slow increase in prices in the current market, honestly I don’t think people who bought in the last 2 to 3 years (especially uncompleted projects) can make a decent profit if they sell now or in the near future. Seller’s stamp duty is more preferrable. Whether people have capital gain or capital loss, once they sell, they still have to pay tax to the government.
Hi, I have been waiting for the property price to correct but it never and instead went higher. With the latest CM7 and then the announcement of the mega MRT plan, i think i’m just waiting for a miracle to happen for me to be able to purchase a unit.
Never say never. Before the market plunged in 1984-6, 1996-9, 2002-5 and 2008, many people also said that they had been waiting for very long. But during those bad days, why didn’t we see people queuing to buy? Where were the people who had been waiting?
I guess many already bought before the market changed directioin. More rushed in when the market just started to correct. Some decided to buy when the market fell further. But when the market reached the bottom, no one dared to buy anymore!
Hi there! We cash in our house bought in 2009 recently for 1M+ profit…not exactly ‘a pot of gold’ but than again,’buy at good price, sell at fair price’ 🙂 We share your thoughts and will wait for HISTORY.
Good for you! Hold onto your cash and wait for the next opportunity to strike again.
Ok i will also hold on and not let into temptations and wait for the next opportunity to strike again. hopefully this time my eyes and ears are open and the doorsss are opened for me too.
Ok i will also hold on and not let into temptations and wait for the next opportunity to strike again. hopefully this time my eyes and ears are open and the doorsss are opened for me too.