Singapore announces harsh measures to cool housing market

Singapore government announced a fresh comprehensive set of stringent measures on Friday to cool the city state's residential property market. The latest measures, which will take effect on Jan. 12, include higher buyer's stamp duty, tighter loan-to-value limits, higher minimum cash down payment for second and subsequent housing loans, as well as seller's stamp duty for industrial properties. Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said that the government had to take further measures to check recent market trends and avoid a more serious correction in prices further down the road. "The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market," he said. The government said the latest measures might be temporary and subject to reviews depending on the market conditions. With the latest measures, the additional buyer's stamp duty will be raised by between 5 and 7 percent across the board, including those for permanent residents buying their first and subsequent residential property and Singaporeans buying their second property onwards. Foreign or non-individual buyers of private property will have to pay an additional buyers' duty of 15 percent, up from the 10 percent announced as part of a round of cooling measures earlier. The loan-to-value limit will be lowered for individuals obtaining their second and subsequent housing loans, and the minimum cash down payment for individuals will also be raised significantly. Permanent residents, or foreigners who have been granted permanent residency, will not be allowed to sublet their whole public housing units. The maximum strata floor area for new executive condominium units will be capped at 160 square meters. In addition, a new sellers stamp duty of 5 to 15 percent will be imposed on industrial property, depending on when it is sold. Singapore buyers of their first property will not be affected by most of the measures. Local media said it was the seventh and most comprehensive round of cool-down measures announced by the government since the housing prices began to rise quickly along with the rebound of the economy in 2009. Nevertheless, the housing prices in Singapore still rose to record highs in the last quarter of 2012 despite the cooling measures. The public housing units, which are built and sold by the government to local households, account for 76 percent of the total number of residential units in Singapore. The rest are private properties that are less stringently regulated. The government has also significantly increased the supply of public housing units over the past two years. Each household is allowed to buy only one unit of public housing unit, which the government has been trying to keep affordable. "A large supply of public and private housing -- up to 200,000 units in total -- will be completed in the coming years. Coupled with the new measures, we will be better placed to ensure that housing remains affordable to Singaporeans," Minister for National Development Khaw Boon Wan said.