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SG PROPERTY NEWS
Additional Measure to Ensure a Stable and Sustainable Property Market - 11 January 2013 from URA.gov.sg
The Government announced today a comprehensive package of measures to cool the residential property market. It also introduced a Seller’s Stamp Duty on industrial properties for the first time, to discourage speculative activity in the industrial market.
Cooling Measures for the Residential Property Market
The Government has implemented several rounds of measures to cool demand and expand supply, so as to moderate the increase in housing prices. While these measures have dampened speculative buying, the demand for residential property remains firm and prices have continued to rise.
The continued buoyancy of the property market reflects the very low interest rate environment and continued income growth in Singapore. These factors supported a record level of housing transactions last year, particularly from investment demand. Housing prices have also shown signs of reaccelerating in recent months, in both the private residential and HDB resale flat markets. Price increases, if not checked, will run further ahead of economic fundamentals and raise the risk of a major, destabilising correction later on.
The Government has therefore decided to implement a further set of measures to cool the private and public housing markets. These measures are calibrated to be tighter on property ownership for investment, as well as on foreign buyers. To discourage over-borrowing, financing conditions for housing have also been tightened. In addition, structural measures have been implemented to strengthen the policy intent of public housing and executive condominiums.
Deputy Prime Minister and Minister for Finance Mr Tharman Shanmugaratnam said: “The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market. We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road.”
Minister for National Development Mr Khaw Boon Wan said: “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.”
Measures Applicable to all Residential Property
The following measures will take effect on 12 January 2013:
a) Additional Buyer’s Stamp Duty (ABSD) rates will be:
i) Raised between five and seven percentage points across the board.
ii) Imposed on Permanent Residents (PRs) purchasing their first residential property and on Singaporeans purchasing their second residential property.
b) Loan-to-Value limits on housing loans granted by financial institutions1 will be tightened for individuals who already have at least one outstanding loan, as well as to non-individuals such as companies.
c) Besides tighter Loan-to-Value limits, the minimum cash down payment for individuals applying for a second or subsequent housing loan will also be raised from 10% to 25%.
The measures listed above will not impact most Singaporeans buying their first home. Some concessions will also be extended to selected groups of buyers, such as married couples with at least one Singaporean spouse who are purchasing their second property and will sell their first residential property.
These new ABSDs and loan rules are significant, but they are temporary. They are being imposed to cool the market now, and will be reviewed in future depending on market conditions.
The details of the ABSD measure are set out in Annex I, and the housing loan measures, in Annex II.
Measures Specific to Public Housing
The Government is also introducing measures to further moderate the demand for HDB flats, instil greater financial prudence among buyers, and require owner occupation by PR buyers. The following measures will take effect on 12 January 2013:
a) Tighter eligibility for loans to buy HDB flats:
i) MAS will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions2 at 30% of a borrower’s gross monthly income3.
ii) For loans granted by HDB, the cap on the MSR will be lowered from 40% to 35%.
b) PRs who own a HDB flat will be disallowed from subletting their whole flat.
c) PRs who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.
Details of these measures are in Annex III.
An additional measure will take effect on 1 July 2013 to tighten the terms for granting HDB loans and the use of CPF funds for the purchase of HDB flats with remaining leases of less than 60 years (details of this measure are in Annex IV).
Measures for Executive Condominium Developments
The Government will introduce measures specific to new EC developments to ensure that ECs continue to serve as an affordable housing option for middle-income Singaporean families.
The following measures will take effect on 12 January 2013:
a) The maximum strata floor area of new EC units will be capped at 160 square metres.
b) Sales of new dual-key EC units will be restricted to multi-generational families only.
c) Developers of future EC sale sites from the Government Land Sales programme will only be allowed to launch units for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.
d) Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the ‘bonus’ GFA of a residential development and subject to payment of charges. This is in line with the treatment of balconies under URA’s current guidelines. Details of this measure are at www.ura.gov.sg/circulars/text/dc13-01.htm.
Cooling Measure for the Industrial Property Market: Seller’s Stamp Duty
Prices of industrial properties have doubled over the last three years, outpacing the increase in rentals. In addition, there has been increasing speculation in industrial properties: in 2011 and the first eleven months of 2012, about 15% and 18% respectively of all transactions of multiple-user factory space were resale transactions carried out within three years of purchase. This is significantly higher than the average of about 10% from 2006 to 2010.
The Government is introducing Seller’s Stamp Duty (SSD) on industrial property to discourage short-term speculative activity which could distort the underlying prices of industrial properties and raise costs for businesses.
The following SSD rates will be imposed on industrial properties and land bought and sold within three years of the date of purchase:
a) SSD at 15% if the property is sold in the first year of purchase, i.e. the property is held for one year or less from the date of purchase.
b) SSD at 10% if the property is sold in the second year of purchase, i.e. the property is held for more than one year and up to two years from the date of purchase.
c) SSD at 5% if the property is sold in the third year of purchase, i.e. the property is held for more than two years and up to three years from the date of purchase.
These SSDs will apply for industrial properties and land bought on or after 12 January 2013.
The Inland Revenue Authority of Singapore (IRAS) will be releasing an E-tax guide on the circumstances under which SSD is applicable and the procedures for paying SSD. The E-tax guide will be available at www.iras.gov.sg.
Issued by the Ministry of Finance, Ministry of National Development, Monetary Authority of Singapore and Ministry of Trade & Industry
1 Regulated by MAS
2 Regulated by MAS
3 Medium-term interest rates shall be used to determine the monthly mortgage instalments from MAS-regulated financial institutions.
Property prices rose in Singapore in the third quarter of 2012, latest figures show - 24 Oct 2012 from propertywire.com
Resale prices of private non landed homes in Singapore increased by 3.2% in the third quarter of 2012, according to the latest data from the Singapore Real Estate Exchange (SRX).
The index, which compiles data from 11 top property agencies in Singapore, also showed that on a month on month basis prices in September were up 2.5%.
It means that home prices reached an historic high of S$1,156 per square foot in the third quarter and the quarterly jump of 3.2% was a contrast to the 2.2% fall in prices of new units over the same period.
Resale units located in the city fringe saw the strongest price gain of 7.1% during the quarter and prices of resale non-landed private homes were up 3% in the mass market segment and 0.75% in the core central region.
The SRX report also showed that residential rental yields remained stable at 4% in the third quarter of the year.
The SRX figure for quarterly sales is somewhat higher than the 0.5% price gain in private residential property prices as reported by the Urban Redevelopment Authority but it said that is because its data does not take into account new home sales and it includes transactions done in the last three weeks of September.
On the HDB resale market, SRX said overall median cash over valuation rose for the first time this year to S$30,000, reversing a downward trend in the last three quarters. This has contributed to a 2.3% increase in median prices for HDB resale units in the third quarter.
Its report also showed that the highest median price is in Serangoon for executive flats at S$690,000 across all HDB towns. Median monthly HDB rent rose for the first time in four quarters from S$2,300 to S$2,400 between July and September this year.
Experts believe that even although prices are rising the government is unlikely to impose new cooling measures in the immediate term, taking into consideration the current economic conditions and the effectiveness of the previous policies.
The Urban Redevelopment Authority (URA) estimates for the third quarter of 2012 shows that private home prices increased 0.5%, the highest rate of increase this year.
It is thought that the last few rounds of cooling measures, including the ABSD (additional buyers stamp duty) have been successful in curbing overseas buying interest, reflected in the lower number of foreign buyers across all residential segments.
Speculators have also been kept out of the market and investors hold properties for a longer period, as indicated by the lower sub-sale transaction volumes.
Renovation guide for landed home owners by Jennani Durai
GO AHEAD and renovate or rebuild your home, but do not be a neighbour from hell in the process.
Owners of landed property now have a clearly defined checklist identifying the dos and don'ts during renovation or building.
A set of guidelines released by the Government yesterday urges landed home owners to think about their neighbours when carrying out building works.
The guide covers subjects that are becoming increasingly relevant as greater numbers of house- proud Singaporeans either tear down and rebuild houses or make additions to them. Aside from minimising noise and dust problems, home owners should consider details such as the materials used to build the facade of a house, the guide says. Even the placement of condensers of air-conditioning units matters in maintaining neighbourly relations, it says.
A circular containing these guidelines was sent out by the Urban Redevelopment Authority and the Building and Construction Authority yesterday to the various associations for home owners, architects, engineers, contractors and builders.
A footnote in the circular said that the guide was intended to be "advisory" in nature, and that both authorities "are not obliged to intervene in the event that any party chooses not to adhere to the guide".
Dr Ho Nyok Yong, president of the Singapore Contractors Association, said that tearing down and rebuilding houses has become more common in older landed housing estates.
"Many who buy houses now want to do alterations so that the houses look newer," he said.
Mr Lim Peng Hong, who owns engineering firm PH Consulting, explained that many people want to maximise their land.
"Land is expensive now, so if you buy a two-storey house and you are able to construct a three-storey house on that land, the tendency will be to tear down the original house to increase living space," he said. Mr Lim is the former president of the Association of Consulting Engineers Singapore.
Dr Ho said the circular was timely as previous guidelines had governed renovation in Housing Board flats but not private houses.He added that the guidelines would raise overall awareness among home owners and contractors alike.
"If there is going to be hacking into walls or a lot of time spent on renovation, it's responsible to inform your neighbours, as they may need time to prepare," he said.
He pointed out that contractors could also make use of specialist equipment to reduce noise. For example, the guide suggests using smaller, quieter micro-piles rather than noisy reinforced concrete piling systems that could also potentially cause damage to surrounding properties.
Mr Theodore Chan, president of the Singapore Institute of Architects, advises landed property owners to consult an architect as the first step in their renovation to minimise the inconvenience caused to their neighbours.
Ms Lee Bee Wah, an MP for Nee Soon GRC, said she periodically gets complaints from residents in landed estates about their neighbours' renovation works, but that it is not an increasing trend.
"Mostly, they complain about the noise and dust created," she said.
"I've also received complaints from residents that construction workers climb on their roofs without their consent to carry out works on the neighbouring house."