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8 Feb

One person to a home?

That might be the way Singapore’s property market goes in future. 6.9 million by 2030? Could the number of new homes be sufficient if this new trend continues?

Condo

More home owners are taking sole ownership of a property, to free up their spouse or family members for ownership of other properties whilst avoiding the additional stamp duties payable on the second and subsequent properties. The savings could be quite substantial, considering the new measures now require Singaporeans owning a second home to pay a 7 per cent ABSD (additional buyers stamp duty) and PRs (permanent residents) to pay 10 per cent.

Even families who currently have more than one name on the property are ‘decoupling’ or transferring their share of the property only one person so the rest are able to now purchase new properties without paying the additional buyers’ stamp duty. The 3 per cent standard stamp duty rate which comes with the transfer is however still applicable. How many properties would one family essentially own then? Is it going to be a case of landlord over tenants in the very near future?

KhattarWong managing partner Gurbachan Singh considers the recent cooling measures to be the ‘most radical’ since 1973, and a sign that the Government is keen to look after Singaporeans first. However there are still loopholes to be filled in and constrains to be released. The situation that occurs upon the inheritance of a property needs to be reconsidered as being levied up to 16 per cent ABSD on a property that one has inherited or is placed the executor of could hardly be fair, especially if special circumstances apply. Mr. Singh has said that should the response from IRAS not be satisfactory, they are willing to take the rulings to court.

7 Feb

Property developers discounts may be cut

If you’re waiting to see if the developer of your property of choice might dangle discounts to counter the recent cooling measures, you might have to reconsider. The authorities have caught on to property developers‘ tactics of offering discounts as a means to entice customers to buy new properties, especially since the cooling measures have taken a huge chunk out of the business.
House

But fear not, only the indirect discounts are under review by the Urban Redevelopment Authority. These mostly refer to the rebates and vouchers that the buyer receives only after purchasing the property. Since these are not reflected in the upfront price which the buyer pays, it may make the cooling measures seem ineffective, which also means URA’s quarterly price index based on caveats lodged might not be a true reflection of the market situation.

Property developers on the other hand tend to lean towards indirect discounts as this helps placate early buyers who may not be happy that they had gotten the raw end of the deal. Keeping the upfront price high also helps to keep prices high all around.

Other ways which developers have been trying to help buyers out are through the partial or full absorption of the Additional Buyers Stamp Duty (ABSD) which has been increased in the most recent round of measures. The frequency and fervency of this practice might be what the authorities are watching as it negates the effect of the property measures.

Another concern is also that the true value of the property needs to be conveyed truthfully to the home buyer, but with the discounts and cuts, it might not be the case and it might only confuse consumers. Not forgetting that home loans are based on the property value, thus might buyers be paying more in the end through bank loan interests for a higher priced property?

So are the cooling measures truly working? If it seems that discounts are offered more frequently, then it might be.

15 Jan

2013′s first round of Property Cooling Measures

Housing policies are getting a major shake-up as the Government throws in a bunch of new property cooling measures, for good measure? Perhaps we speak too early.

Are Mr. Khaw's comments reflective of the Ministry's stand?

But first, lets see what is brought to the table:

1. Additional Buyers’ Stamp Duty increase of 5 to 7 per cent
2. Additional Buyers’ Stamp Duty to be imposed on PRs buying their first home, and on Singaporeans buying their second.
3. For those with outstanding loans, the loan-to-value limit will be tighten by 10 to 20 per cent
4. If you are buying your second or subsequent home and need a loan, your minimum cash down payment will be now 25% instead of the previous 10%.
5. The percentage of monthly income that can be used to service your HDB home loan is now 30% if you borrow from the banks, and 35% if you borrow from HDB.
6. Stricter subletting rules for PRs means they are no longer allowed to sublet their entire flat.
7. PRs will not be allowed to own their HDB flat if they wish to purchase a private property. They will have to sell it before they buy their new private home.
8. A cap on Executive condominium units at 160 sq metres.
9. Dual-key units will only be eligible to multi-generational families
10. There’s now a seller’s stamp duty for industrial properties of 5% to 15% if you sell it within three years of purchase.

HDB flats

A whole lot to digest and a blow to property investors it seems. In general, those buying their first home will not be largely affected, though PRs will have to pay an additional buyers’ stamp duty even for their first home.

The numbers from Q4 of 2012 which indicated prices were hardly budging, and quite possibly continuing its rise, were the motivation behind the quick and huge move. Deputy Prime Minister Thaman Shanmugaratnam mentioned at a briefing last Friday, that the government has already been quite concerned over the “re-acceleration in prices in both the private market and the HDB resale market“.

The next two quarters may reveal the effects of these new rulings, though for the next couple of months, the market may see some slowdown. But as many may already find new properties within their affordability range, it could be simply a shift of priorities and options from one property category to another.

26 Oct

Residential property investors on the decline

The property cooling measures seem to be finally taking effect as the number of property buyers purchasing real estate for investment purposes are decreasing. Since the several rounds of property cooling curbs have been launched, the percentage of residential property investors have dropped from 38 per cent in 2010, to 31.8 per cent in 2012.

With the most recent measure being the home loan tenure period limitation, industry analysts are predicting an even further drop when the full 12-month figures are out. Despite the decline, one in three home buyers here are still looking into buying properties for investment purposes.

iProp EXPO Nov 2012With the raise of downpayments for a second and subsequent property to 40 per cent and a 16 per cent stamp duty for home owners selling a property within a year of purchase, many home owners have been putting down their children’s names on the second or third mortgages. As their children are younger and can have more years on the loan tenure, it gives them the ability to purchase bigger apartments. On paper that is. And many of these property investors may have already taken out their mortgages prior to the recent property cooling curb. Should you be a current property investor, is it a good time to enter the market?

How does this affect the affordability of homes? Is investing in residential property risky and what should your considerations be? If its answers from experienced experts you’re looking for, attending timely property and investment seminars may be one way you can gain more knowledge and ensure that you are truly making a wise decision.