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Singapore Tightens Property Market Rules

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Singapore tightened its property market rules as home prices increased notably over a year on strong demand and housing transactions.

The government raised the Additional Buyer's Stamp Duty, or ABSD, on purchase of residential property and lifted the loan-to-value limits, according to a joint statement published by the Ministry of Finance, the Ministry of National Development and the Monetary Authority of Singapore.

Nonetheless, the current ABSD rates for Singapore citizens and Singapore permanent residents purchasing their first residential property will be retained at 0 percent and 5 percent, respectively.

The ABSD rate for foreign buyers was lifted to 20 percent from 15 percent. At the same time, entities buying residential properties for development have to pay 25 percent ABSD instead of 15 percent.

LTV limits will be tightened by 5 percentage-points for all housing loans granted by financial institutions.

The government said such measures are taken to cool the property market and keep price increases in line with economic fundamentals.

The sharp increase in prices, if left unchecked, could run ahead of economic fundamentals and raise the risk of a destabilizing correction later, especially with rising interest rates and the strong pipeline of housing supply.

Data from the Urban Redevelopment Authority, released earlier this week, showed that residential property prices continued to rise in the second quarter. House prices increased 3.4 percent sequentially, but slower than the 3.9 percent rise logged a quarter ago.

by RTTNews Staff Writer

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