The Big Freeze!

The Government has introduced the seventh set of property cooling measures in over three years to try and rein in the red-hot prices. These is effective for all new property purchases on/after today (January 12).

The latest package are seen as the most sweeping to date, with some of the measures being temporary and will be reviewed later while others are likely to stay for the long term.

Below is the list of new measures and what the wife and I think about each:

Temporary, counter-cyclical measures (applies to all residential property)

1. Singaporeans to pay 7% Additional Buyers' Stamp Duty (ABSD) on their second purchase (up from 0%) and 10% on subsequent purchases (up from 3%).

More costly to acquire a second (or more) property for investment purposes.

2. PRs to pay 5% ABSD on first purchase (up from 0%) and 10% on subsequent purchases (up from 3%). Foreigners and corporate entities will pay 15% ABSD on all purchases (up from 10%).

Our government finally concede to the people's call for "Singaporean first" private housing policy?

3. Tighter Loan-to-Value limit on housing loans for those with at least one outstanding home loan; 50% for second loan (down from 60%) and 40% for third (down from 60%); if loan tenure is more than 30 years or extend past age 65, it is 30% for second loan and 20% for third onward.

Putting the squeeze on how much you can borrow from the bank, so one will have to be even more "deep pocket" to be able to afford a second or more property.

4. Minimum cash payment for those with at least one outstanding home loan to go up from 10% to  25%

More cash downpayment = more cash upfront = reduced affordability

 

Permanent, structural measures

1. Maximum strata floor area of no more than 160sqm (1,722sqft) for new Executive Condominium (EC) units.

Bye bye super-sized penthouses and presidential suites!

2. New dual-key units for multi-generational families' use only

If policed properly, this spells the end of the "stay in one, rent out the other" dream...

3. Developers of future EC sites from Government Land Sales to sell units only 15 months from the award of the site or after completion of foundation works, whichever is first.

No more of them Forestville fiasco!

4. Private enclosed space and roof terraces to be treated as gross floor area.

• These will be counted as part of the 10% bonus gross floor area (GFA) for both EC and private condos, and subject to payment of development charges/differential premium. Thus no more "free area" for developers to make money on.
• The new treatment will likely mean that existing owners of homes with PES and roof terraces will see their properties appreciate in value (at least on paper) as these areas will now be priced the same as all interior space. So Huat Ah!

The wife and I feel that the latest set of  cooling measures is likely to cause a fair bit of upheaval to the private property and EC market over the next couple of months. The big question is whether the effects will be longer lasting this time around as compared to the previous 6 rounds.

What do you think?