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The Singapore government on Monday introduced more measures to cool the buoyant property market.

These include raising the holding period for which a home seller must pay a stamp duty and reducing the maximum bank loan amount for existing home owners who want to buy another property.

The measures, which take immediate effect, came as a strong economy and low borrowing rates have continued to push property prices up, sparking concerns of a property bubble.

Private property prices shot up by some 11 per cent in the first half of this year and have now exceeded the previous peak in 1996.

National Development Minister Mah Bow Tan said prices are “on the high side”.

He said: “If the current momentum in the market continues, what will likely happen is that a property bubble will form. And when the bubble burst, and not if, but when the bubble burst, there will be severe implications for individuals, as well as for the economy on the whole.”

So the government has moved to curb speculation and also encourage financial prudence among buyers.

The holding period for the seller’s stamp duty has been increased from one to three years to discourage home owners from flipping. The seller’s stamp duty was first introduced in February this year.

Another measure will impact those who have one or more outstanding housing loan. Home buyers who already have at least one mortgage will have to pay more cash upfront when buying their next property.

The minimum cash payment has been doubled from five per cent to 10 per cent of the home’s valuation, while the maximum bank loan amount has been reduced from 80 to 70 per cent.

The government said the objective of the measures is “to ensure a stable and sustainable property market where prices move in line with economic fundamentals”.

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August 30th, 2010 | Tags: Property, Real Estate, Rich Way, Wealth | Category: Rich Way | Leave a comment

Property developers who are worried about the looming uncertainty in the property market are fast-tracking mass market properties to take profits sooner, said Cheng Wai Keung, chairman of Wing Tai Holdings.

As the cooling measures implemented by the government take hold, developers are launching properties at a faster pace than usual, said Mr. Cheng, who spoke to the Straits Times.

In response to a question on whether he believed that a correction in the real estate market would occur, he replied: “My reading of the upgraders’ market is that it seems to have come to a saturation point,” after a “tremendous increase” in the number of permanent residents and low interest rates caused property demand to outstrip supply.

The company would have tendered for land in 2009 before prices increased, but not now as it would be risky to “chase” rapidly increasing prices, said Mr. Cheng.

“If you look at any developer, they are actually pushing out (properties) much faster than the normal timeframe required. What it translates to is that people believe the risks are too high to wait.

“You can see that more and more projects are actually pushed out in six to nine months’ time, rather than the normal time of one to 11/2 years.”

“If we also try to push off in the next six to nine months, we may get jammed and given there is such a high price, we believe, even if we wait, the upside may not be there,” added Mr. Cheng.

The mass market segment has seen increases in property prices, and homebuyers have already bought 9,957 private homes in January to July this year, following the strong sales of 14,688 units in 2009.

Based on the latest official data, private home sales have slowed down but prices have still increased above their 1996 highs.

Mr. Cheng said that more government measures will be rolled out if the property market is still out of control.

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Singapore residential market easing up

Singapore Property Cycle Revealed

August 28th, 2010 | Tags: Property, Real Estate, Wealth | Category: Rich Way, Wealth | Leave a comment