With immediate effect, Minister for National Development (MND) Mr. Mah Bow Tan has announced 3 main measures to cool the current speculative property market:-
- Removal of the Interest Absorption Scheme (IAS) and Interest Only Housing Loans (IOL) with effect immediately (14th September 2009)
- Reinstatement of Confirmed List for 1st Half 2010 Government Land Sales (GLS) Programme
- Non-extension of the January 2009 Budget assistance measures when it expires.
What is IAS?
Interest Absorption Scheme. Details can be found here.
What it means for the property market?
Speculative property buyers will not be able to opt for IAS with immediate effect, bringing them to service their mortgage as soon as the construction of the new project begins according to the stage it is built (Normal Payment Scheme – NPS).
This will stop a huge number in terms of speculation; though it shouldn’t stop genuine buyers who is looking to buy a place of their own stay.
The reintroduction of GLS also means that the Government is preparing to insert fresh supply of land to curb the excessive speculation in this current market.
Simple equation – More supply, less demand.
What happens to new project launches after today?
The Monetary Authority of Singapore will disallow the IAS and IOL with immediate effect from today, i.e. 14 Sep 2009. This measure will apply to all private residential projects. The only exception will be uncompleted private residential projects where the units had already been offered for sale under the IAS before 14 Sep 2009. The IOL will be disallowed with immediate effect.
So projects that has offered IAS before 14th September is still eligible.
Where can I get the official source?
Download a copy of the official press release jointly from Ministry of National Development (MND), Ministry of Finance (MOF), Ministry of Law (MOL) and Monetary Authority of Singapore (MAS) and Question and Answer on how these changes will work in detail.