* All rates are corrected as at 16 Mar 2010
** All rates quoted are indicative only, and subject to change without any prior notice
*** All rates indicated are to be used as a guide only. Further confirmation with the respective banks is required.
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Latest Housing Loan Packages – March 2010
Effective 20th February 2010, the Singapore Government has introduced the following anti-speculative measures to deflate and allay the increasing pressure of a property bubble forming.
1. Introducing a Seller’s Stamp Duty (SSD) on all residential properties and residential lands that are bought after the abovementioned date and sold within 1 year from the date of purchase; and
2. Lowering the Loan-to-Value (LTV) limit to 80% for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore (MAS)
Following the withdrawal of deferred payment and interest only scheme, the resilient residential property market continued to push for new heights in terms of both prices and volume in expectation of imminent economic recovery, exuberance due to the opening of the two integrated resorts, low borrowing costs and high liquidity in the market, and most importantly, the increase in our population over the years.
With these two measures, the Government is taking a pre-emptive step to reduce the number of speculative transactions. Those who plan to flip private residential properties may have to review their strategy taking into account the increase in price needed to make this profitable bearing in mind the cost of SSD. Lower loan to valuation (LTV) bank financing will keep marginal buyers and speculators at bay. This will likely bring cheer to buyers of resale flats as they are likely to be greeted with more choices and stronger bargaining power in order to lower the cash over valuation.
The Government is concerned with the overheating of property market as it appears to be moving ahead of signs of sustainable recovery. Should the actual recovery fall short of expectation, the property buyers and speculators alike will have to face financial losses. In addition, strong demand for funds may increase cost of borrowing which will seriously impact those who are over-stretched with loan installment payments. To make matters worse, the financial system could be threatened if the property bubble bursts and the progress of economic recovery derailed.
After the announcement, the expectation is for buyers of private residential property to shun away from the market and stay at the sidelines watching the reaction of the sellers with the hope of catching a bargain. Without maximum LTV of 90%, buyers will likely have lesser competitors, and sellers less offers. Consequently, if a property is bought at 3% to 5% discounted price, the impact of SSD on buyers who intend to flip will be minimal.
From the response of 1st new major mass market project launched following the press release by MDA, units at The Estuary were going for around $750 psf as buyers seemed undeterred by these measures. These buyers have demonstrated their financial means of at least 20% commitment in their purchases and also the willingness to hold the property for at least 1 year.
Supported by the strong sales from The Laurels in Cairnhill road, The Vision at West Coast and Coralis at Joo Chiat road over the weekend, further enhanced the point that our property market is stil HOT!
What’s the cause of such phenomenon? Is the project priced to sell? Are these buyers buying ahead of Government’s next deterrence? Or are prices going to go up further in view of the demand due to improving economy and growing population?
But now the question is – When is hot too HOT!
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