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Budget 2015: What you need to know right now
BUDGET 2015 COVERAGE
Budget 2015: What you need to know right now

Income taxes will be hiked to shoulder massive investments.
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NEWS
RESIDENTIAL PROPERTY | Staff Reporter, Singapore
Published: 14 Jan 13
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January 2013 property cooling measures will mostly pummel Singapore PRs

Government has restricted their ability to purchase resale flats.

“It is evident that the latest cooling measures is to moderate the housing prices and instill greater prudence in financing HDB flat. The revised Additional Buyer’s Stamp Duty (ABSD) implemented will impact the Permanent residents (PR) segment most," said Mr Mohamed Ismail, Chief Executive Officer of PropNex Realty,

"PRs will now have to raise an additional 5% cash outlay to pay for the ABSD in their purchase of the first resale flat. As PRs constitute about 20% of the HDB resale market, it is predicted that demand for HDB resale flats are likely to be eased in coming months," he added.

"Additionally, PRs who could only borrow from financial institutions for the purchase of Resale HDB Flats are now going to be restricted by the Mortgage Servicing Ratios (MSRs) for Loans. This is going to be greatly reducing the quantum that they can borrow as the ratio is now being reduced to 30% of the borrower’s gross monthly income (originally 40% of the borrower’s gross monthly income)," he said further.

Mr Ismail noted also that PRs will now be disallowed from subletting and must sell within 6 months of purchase a private residential property. This measure will see some impact as PRs own 49,190 HDB flats out of the 1 million HDB flats and the 2,142 PR rented flats form about 5% of the all approved flats for sublet.

“Overall the new cooling measures will result in lowering the COVs as buyers will have to contend with lower MSR for all Singapore citizens and Singapore PRs and the new 7% ABSD for PRs. The COVs for bigger flats (ie 5-room and Executive flat category) will witness a sharper drop by 30% immediately. The current median COV for 5-room and Executive flats have been around $40,000 to $50,000. This lower COV may encourage some first-timers to enter the resale market. Overall, median resale prices of HDB this year will substantially slow down from the hay days of double digit growth in 2010 and 2011 and 6% growth in 2012. This year, we expect HDB prices to remain flat and at best attaining only a 1 to 2% price growth in keeping pace with the economic growth,” explained Mr Ismail. 



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Tags: January 2013 property cooling measures, Singapore residential property, HDB resale flats, Singapore permanent residents, Singapore PRs

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