RESIDENTIAL PROPERTY | Staff Reporter, Singapore

Market barely had time to think after cooling measures announcement

Singapore departed from its recent practice of releasing sensitive information on Fridays.

The implementation of new cooling measures in Singapore’s property market departed from the government’s “recent practice” of releasing sensitive announcements on Fridays, barely giving the market time to respond.

Withers KhattarWong partner Kenneth Szeto said in a note that announcements were supposedly given on Fridays to give a weekend buffer before the stock market reaction.

“Buyers and sellers themselves barely had five hours to react to the announcement before implementation, and property launch show flats were immediately flooded, as buyers rushed to issue their sale options before midnight to come within existing rules - to either pay less Additional Buyers Stamp Duty (ABSD) or obtain higher quantum home loans,” he said.

Szeto added, “The ink has barely dried on the rules and regulations, and the usual accompanying tax guides are still being written. For parties who are engaged in ongoing deals, it will be necessary to look carefully at the impact of the new rules, and seek the necessary clarification with the tax authorities on how ongoing deals will be affected.”

Also read: Should Singapore's housing market anticipate more cooling measures?

He added that the revised housing loan limits mean that even first time buyers will need to place an additional 5% cash down payment on their home purchases, an amount which is not insignificant.

“This is expected to rein in buyers' demand for both new launch properties as well as resale properties, just as the asking prices in the market are starting to gather momentum after four consecutive years of flat-lining or decline,” he said, echoing other analysts' forecasts.

Szeto also noted that the latest round of ABSD rate increases are, by far, the highest, and the new 25% ABSD payable by corporate entities (affecting property developers) may cool developers' interest in acquiring en bloc sites for redevelopment, if they are not confident of selling the projects within the five-year deadline.

“In recent months, even before the implementation of the measures, Singapore-based developers have already been observed to be more selective with site selection, and more conservative with bid prices,” he added. 

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