Singapore tightens residential property rules amid surging prices

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The Singapore government has unveiled tougher rules for the purchase of residential properties including higher additional buyer’s stamp duty (ABSD) and tightening of loan-to-value (LTV) limits in a bid to cool the market amid surging prices.

The ABSD for Singaporeans and permanent residents who are buying their second or subsequent property will be raised by five percentage points with effect from Friday (6 July), the Ministry of Finance, the Ministry of National Development and the Monetary Authority of Singapore said in a joint statement on Thursday.

For instance, a citizen who is buying a second residential property will have to pay 12 per cent ABSD, up from 7 per cent previously. For entities buying a residential property, the ABSD will be raised to 25 per cent from 15 per cent.

The LTV limits for all housing loans granted by financial institutions will be tightened by five percentage points. HDB loans will not be affected by the new rules.

For instance, the LTV limit for individual borrowers of first housing loans will be tightened to 75 per cent from 80 per cent for a loan tenure of 30 years or less, or age 65 and below. The LTV limit for such borrowers will be tightened to 55 per cent from 60 per cent for a loan tenure of more than 30 years or past age 65.

For non-individual borrowers, the LTV limit will be tightened to 15 per cent from 20 per cent.

The joint statement noted that private home prices began rising in the third quarter of last year after having declined gradually for almost four years. Prices have increased sharply by 9.1 per cent over the past year while demand for private homes has also seen a strong recovery, the statement added.

Speaking on the new measures, Lawrence Wong, Minister for National Development, said the government has been monitoring the property market closely.

“We are very concerned that prices are running ahead of economic fundamentals. There is a large supply of units coming on stream and interest rates are going up. We want to avoid a severe correction later, which can have more destabilising consequences. Hence we are acting now to maintain a stable and sustainable property market,” he added.

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