Housing Development Board (HDB) flat owners will have to wait longer before they can resell or sublet them. The minimum occupation period was raised from three years to five years for resale and subletting of HDB flats under new rules to cool the property market.
Under the new rules announced today, HDB flat owners will also have to wait for five years before they can buy private property. There were no such restrictions until now.
Singapore also increased down payments for second mortgages and imposed a stamp duty on property held for less than three years to curb speculation after home prices surged 38 per cent in the second quarter.
Buyers who hold more than one mortgage can now only borrow up to 70 per cent of a property’s value, down from 80 per cent previously. And they have to pay 10 per cent in cash, up from 5 per cent previously. A seller’s stamp duty will apply to all residential units and land sold within three years of purchase, up from one year.
The new measures hurt Singapore-listed property stocks with Southeast Asia's biggest developer Capitaland falling by 2 per cent and City Developments dropping as much as 2.8 per cent while the broader market was trading higher, reported Reuters shortly after the market opened this morning.
The government imposed in February 2010 a seller’s stamp duty (SSD) for residential property bought on or after 20 February 2010 and sold within a year of purchase. The Ministry of National Development said today:
For residential properties bought on or after 30 August 2010, SSD will be imposed if these properties are sold within three years of purchase. Specifically, the SSD levied on residential properties will be revised to as follows:
1. Sold within the first year of purchase, i.e. the property is held for 1 year or less from its purchase date – The full SSD rate (1% for the first $180,000 of the consideration, 2% for the next $180,000, and 3% for the balance) will be imposed.
2. Sold within the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years – 2/3 of the full SSD rate.
3. Sold within the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years – 1/3 of the full SSD rate.
No SSD will be payable by the vendor if the property is sold more than 3 years after it was bought. Click here to see how SSD will be computed.
The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is at least 3 years.
HDB will be offering more than 16,000 new flats in 2010. If demand remains strong, HDB is prepared to launch up to 22,000 new flats in 2011. Over two years, HDB will offer more new flats than the total flats in Toa Payoh town today (35,400 flats).
In 2011, HDB will release land sites for another 4,000 Design, Build and Sale Scheme (DBSS) flats and 4,000 executive condominiums (ECs), if demand is sustained. This injection of 7,000 DBSS flats and 8,000 ECs over two years is also significant, says HDB. In comparison, 4,000 DBSS flats and 10,000 ECs have been launched for public sale so far.
Currently, first-timer households with monthly income of between $8,000 and $10,000 may buy an EC with a CPF housing grant of S$30,000. To widen their housing options, HDB will allow these households to buy new DBSS flats with a CPF housing grant of S$30,000.
"The government's objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. The property market is currently very buoyant," the Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore said in a joint statement.
Reuters reported:
Singapore's move to curb speculation in its residential property market comes on the heels of similar moves by China and Hong Kong, which are also trying to keep a lid on rising home prices.
Hong Kong earlier this month tightened mortgage lending for bigger flats as prices headed for historic highs, while China is clamping down on bank lending to the property sector as well as making sure developers do not hoard land meant for housing development.
Singapore Prime Minister Lee Hsien Loong said on Sunday the government will build 22,000 new public homes next year, up from 16,000 this year, in a bid to ensure housing remains affordable.
"We've acted twice to cool the market — once last year and once in February this year — but prices are still rising," Lee said. "We need to do more."
Private home prices in Singapore rose 11 per cent between January and June, according to the Urban Redevelopment Authority.
Nicholas Mak, former head of research at Knight Frank in Singapore, said the latest government measures targeted speculators but did not affect those looking to buy their own homes.
"First-time homebuyers and those who do not have existing home loans are not affected," said Mak, who is now a lecturer at Ngee Ann Polytechnic.
"This latest move is not to discourage home-buying on the whole. It is aimed at property investment, especially short-term ones."
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