The recent cooling measures did not come as a surprise to many as it was discussed several times this year in the media and in many consumer seminars.
House prices globally continue to rise. According to Knight Frank Global Price Index, the value of an average home increased by 9.45% in the 12 months to Q3 2021, up marginally from 9.2% last quarter. In comparison, Singapore’s price increase of 7.5% (in nominal terms) was ranked 38th globally behind South Korea, Australia, New Zealand and the United States.
If you recall, there was also discussion on implementation of wealth taxes based on individual net wealth but it was dismissed by the Finance Minister, Lawrence Wong who instead noted that Singapore has already introduced some versions of a wealth tax, raising the examples of property and motor vehicle taxes, where those who own bigger and more expensive properties and cars have to pay more in taxes.
In my opinion, the latest measures are to curb speculation due to pent-up demand from foreigners and to address the wealth tax issue. The measures will have the most impact on properties in the prime districts which are the choice of most foreign investors.
Main points:
1) For Singaporeans and PRs buying your first property, there is no change in the stamp duty rate
2) Home sales are likely to moderate in the short-term due to a “knee-jerk” reaction as the market takes time to digest the cooling measures
3) Singaporeans buying their first home will benefit as the cooling measures will ensure home prices do not rise rapidly
4) Upgraders entering the resale market may enjoy better bargaining power as sellers may be less aggressive with asking prices
5) En-bloc hopefuls may face challenges due to a hike in the ABSD rate to 35% for developers and the increase in supply from government land sales
6) Developers will be more price sensitive with future new launches
Overall, the cooling measures have served to ensure the property market remains resilient and to nudge borrowers to be prudent. As the saying goes, “There are opportunities in a crisis”. If you like to find out if the latest measures can benefit you as a first time buyer or as an investor, do reach out to me.
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