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Singapore Considers Cooling Down The Real Estate Market |
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Written by BillyChen
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Thursday, 03 December 2009 |
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The local economy began to become more favorable, Singapore real estate market finally showed signs of life again. Activities in the market has increased significantly, and economists are busy painting rosy picture on real estate transactions in the coming months. But beneath all the noise and optimism, Singapore government announced in November 2009 and calibrated that it intends to take measures to prevent the emergence of the real estate market.
by BillyChen
The local economy began to become more favorable, Singapore real estate market finally showed signs of life again. Activities in the market has increased significantly, and economists are busy painting rosy picture on real estate transactions in the coming months. But beneath all the noise and optimism, Singapore government announced in November 2009 and calibrated that it intends to take measures to prevent the emergence of the real estate market.
Perhaps the memory of the sudden boom and bust in the mid nineties is still fresh in the administration's mind. And this time round, the government is more determined to prevent such a sharp uptake and potentially followed by equally quick reversal of the market.
The government of Singapore has relatively few options that are available and land supply strategy, the tightening of credit and fiscal policy. We go through each of them in detail.
Land Supply Decision - This could be the most effective tool to counter the red hot demand of properties of all types in Singapore. As the government cut down on the release of land for new development, this is certainly going to slow down the supply for new projects being launched to the market, thus putting a curb on the unreasonable property speculation.
Financing - Recently there have been speculations in the market that government may review the guidelines for financial facilities such as private housing loan. Currently the maximum loan amount a lender can approve to a qualified private house buyer is 90 percent. Market players and speculators would be hard hit if this amount is brought back to 80 percent of purchase price.
Taxation Policies - And when it is re-introduced to the market, it would certainly affect the market in a major way.As the government evaluates the options for its intervention in the real estate market, this one would likely feature somewhere in the plan.This capital gain tax has always been a convenient tool to in the past to combat excessive housing appreciation in Singapore.
Raise Property Tax - It could also be targeted approach, focusing on real estate investors and speculators. These people may be subjected to higher taxes than the current 10 percent. Generally, owner-occupier you in Singapore, which is currently half that amount.
Double Stamp Duty - Again this could be effective to slow down the market speculators as a stamp duty would be imposed whenever he chooses to buy or sell a piece of property.
However it is still early days to tell if the government would exercise its option as the market is still directionless at the moment. So there you have it, a quick list of possible measures to fight the potentially overheated property market.
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