With immediate effect, the cooling measures shall take place. Attached are summary of how the ABSD (Additional Buyer Stamp Duty) and LTV (Bank Loan to Value) is adjusted in points.
These bittersweet move is somewhat anticipated yet executed very quickly, causing an overnight uproar of sales over showrooms. These measures should hamper existing buying sentiments and should effectively cool en bloc cycle and foreigners’ interest in Singapore residential market.
Amidst the heating Singapore market, MAS has released an immediate press release which will take immediate effect from tomorrow,
The Monetary Authority of Singapore (MAS) will restrict the tenure of loans granted by financial institutions for the purchase of residential properties. MAS’ move is part of the Government’s broader aim of avoiding a price bubble and fostering long term stability in the property market.
2 The maximum tenure of all new residential property loans will be capped at 35 years. In addition, loans exceeding 30 years tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats. The new rules will take effect from 6 October 2012.
[block type=”download”]Read the official press release from MAS here[/block]
These measures are somewhat expected and mirrored what Hong Kong has done after QE3 was announced by the Feds. Traditionally tenures over 30 years are not too popular, and shouldn’t affect the current property prices. This is especially a good move for home buyers whom might overestimate their affordability as well as investors who tend to stretch the loan tenures in case any volatility will to happen in the market.
Increasing the holding period for imposition of Seller’s Stamp Duty(SSD) from three to four years
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. You can see an example of the computation here.
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
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