Property moves: immediate beneficiaries

Our Government will implement more property cooling measures from tomorrow to ‘maintain a stable and sustainable property market’.

These are: 

  • Raising the holding period for imposition of Seller’s Stamp Duty (SSD) by one more year to four years; 
  • Raising the SSD rates to 16 per cent, 12 per cent, 8 per cent and 4 per cent of the price for residential properties bought on or after Jan 14, 2011, and sold in the first, second, third and fourth year of purchase respectively; 
  • Lower the Loan-To-Value (LTV) limit to 50 per cent on housing loans granted by financial institutions regulated by the Monetary Authority for property purchasers who are not individuals
  • Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from 70 per cent to 60 per cent for property purchasers who are individuals having one or more outstanding housing loans at the time of buying the additional property.

Let me make these observations:

1) The immediate beneficiaries would be individuals who don’t at the moment own any residential property in Singapore and the cash rich: the measures, if they result in cooling demand for homes, means removal of competition for non-property owners and the money bags.

Ergo, cheaper and more property purchases for them, especially if they have long term views and aren’t bothered by the skimming sales tax triggered if what they bought is sold within four years of purchase.

2) Given the limit on bank loans for corporations wanting to buy property, it could push those who are in a position to, to raise fund from the capital markets rather than  borrow from banks. More work for investment bankers.

3) En bloc sale hopefuls had better be more realistic in their asking prices though on the other side of the coin, they may not be holding the bad end of the bargain, as their replacement homes would likely cost less too than in a runaway red hot market.

4) The cash rich who don’t want to navigate the complications of all the Government initiated property price dampeners — with perhaps more to come, if the latest measures fail to gain traction — could turn to the other money maker with no strings attached. And I don’t mean the casinos. Rather, the stock market could well be a prime gainer from frustrated property punters.

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