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Monday, January 14, 2013

7th Property Cooling Measures

On January 11, 2013 (Friday), the government announced the 7th property cooling measures since 2009. This new round of measures is considered by many property analysts as the most comprehensive and harsh steps.

Effective 12 January 2013: 

Private Residential Property Measures 

1. The Additional Buyer's Stamp Duty (ABSD) will be raised by 5% to 7% and will be imposed on Permanent Residents (PRs) purchasing their first and Singaporeans purchasing their second residential property: 
  i. Singaporeans will pay 0%/7%/10% of ABSD on the first/second/third property onwards respectively 
 ii. PRs will pay 5%/10% ABSD on the first/second property onwards respectively 
 iii. Foreigners and non-individuals (companies) will pay 15% ABSD from the first property onwards 

2. The Loan-to-Valuation (LTV) on housing loans will be reduced for non-individuals and individuals with at least one mortgage: 
 i. For individuals obtaining their second mortgage, the LTV is lowered to 50% or 30% if the loan is longer than 30 years or extends beyond 65 years of age of the borrower 
 ii. For individuals obtaining their third or greater mortgage, the LTV is lowered to 40% or 20% if the loan is longer than 30 years or extends beyond 65 years of age of the borrower 
 iii. For non-individual borrowers, the LTV is lowered to 20% 

3. The minimum cash downpayment for individuals applying for the second or subsequent loan is raised from 10% to 25% 

Public Housing Measures 
  1. The Mortgage Servicing Ratio (MSR) will be reduced to 30% for bank loans and 35% for HDB loans 
  2. PRs who own HDB flats cannot sublet their whole flat 
  3. PRs who buy a private property will have to sell their HDB flat within 6 months even if they have fulfilled the Minimum Occupation Period (MOP) 

 Executive Condominium (EC) Measures 
  1. The maximum strata floor area will be capped at 160 square metres 
  2. New dual-key ECs will only be sold to multi-generational families 
 3. Government Land Sales (GLS) EC sites can only be launched for sale 15 months from the date of award or after completion of foundation works, whichever is earlier 
  4. Private enclosed spaces and private roof terraces will be counted as "bonus" GFA and subject to extra charges 

Industrial Property Measures 
 1. Seller's Stamp Duty (SSD) will be imposed on industrial properties and land sold within three years from date of purchase: 15%/10%/5% for first, second and third year respectively 

The above was published in PropertyGuru. The author is Mr Prowise, CFA.

Mohamed Ismail, CEO of PropNex Realty, expect sales folume to fall by 50% and prices to drop by 5% - 7% in the coming months.

Property counters were heavily beaten up:
Capitaland ( previous close : 3.89 ) : -4.11% ( O, H, L, C = 3.61, 3.74, 3.61, 3.73 )
CityDev ( previous close : 12.6 ) : -7.54% ( O,H,L,C = 11.5, 11.98, 11.42, 11.65 )
Ke`land ( previous close : 4.28 ) : -7.24% ( O,H,L,C = 3.97. 4.02, 3.82, 3.97 )
Wing Tai ( previous close : 2.02 ) : -8.91% ( O,H,L,C = 1.815, 1.865, 1.75, 1.84 )

Impact On Property Counters From Previous Property Cooling Measures :

October 2012 ( 6th cooling measure - where government restricted the length of home loans ):
Capitland -3.3%
CityDev -2.3%
Kepland - 1.7%
Wing Tai -1.7%

This is a relatively mild cooling measure. The market did not plunge much and recover within 3~4 trading days.

December 8, 2011 ( 5th cooling measure - where government imposed ABSD ):
Capitaland  - 7.3%
CityDev : - 8.7%
Kepland :-8%
Wing Tai : -6.5%

This particular round of cooling measure ( the 5th ) is quite similar to the current round ( the 7th ).  

The market took around 28 ~ 30 trading days to start recovering for this round ( the 5th ).  Based on the similarity, if the current round ( the 7th ) is going to take the same amount of time do recover ( 28 ~ 30 days ). It is too early now to consider any bargain hunting.




History of all previous property cooling measures :

4th Round, Jan 2011 
  • Increase LTV limit for buyers who have more than one outstanding loan at the time of new purchase from 70% to 60%.
  • Seller's Stamp Duty increased to 16% if owner sells one year after purchase. 12% after 2 years. 8% after 3 years and 4% after 4 years.

3rd round, Aug 2010 
  • Incbease the holding pebiod for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.
  • Increase the minimum cash payment from 5% to 10% of the valuation limit; 
  • AND decrease the Loan-to-Value (LTV) limit for housing loans from the current 80% to 70% for those who have more than one outstanding loan at time of new purchase.
  • Minimum Occupancy Period increased from 3 years to 5 years

2nd round, Feb 2010 
  • Introduction of a Seller’s Stamp Duty (SSD) of up to 3% on all residential properties and besidential lands that are sold within 1 year from the date of purchase.
  • Lowering Loan-To-Value (LTV) Limit from 90% to 80% for Housing Loans.

*Footnote: HDB also launched their own measures in March 2010: HDB launches anti-speculation measures. They were trying to drive down the astronomic cash-over-valuations.

 1st round, Sept 2009 
  • Restarting the confirmed list for the government land sales
  • Not extending the Jan 2009 budget assistance measures for the property market
  • Removal of Interest Absorption Scheme and Interest Only Housing Loans


posted by Market Wizards @ January 14, 2013