Gov’t unveils 3 new property cooling measures

The measure will take effect on 16 December 2021.

The government has unveiled three new measures to cool down Singapore’s property market.

The package of measures comprise of the raising of Additional Buyer’s Stamp Duty (ABSD) rates and tightening of Total Debt Servicing Ratio (TDSR) threshold and Loan-to-Value (LTV) Limit.

The government said prices for both private housing and HDB resale flats have risen by about  9% and 15%, respectively, since the first quarter of 2021.

Whilst these figures remain to be “below their historical averages,” the government said they are seeing a “clear upward momentum” in property prices.

“If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years,” the government added.

Here’s a summary of all the measures which took effect on 16 December 2021:

Revised ABSD rate

The government said ABSD rates will remain at 0% for Singapore Citizens (SCs) and 5% for Singapore Permanent Residents (SPRs) when they purchase their first residential property.

ABSD rate, however, will be raised to 17% for SCs second residential purchase, 25% on their third and subsequent purchases.

For SPRs, the rate will be raised to 25% on their second purchase, and 30% on their third and subsequent purchases.

Rate will also be raised to 30% for foreigners purchasing any residential property; and 35% for entities purchasing any residential property and developers purchasing any residential property.

“This 35% may be remitted under the Stamp Duties (Non-licensed Housing Developers) (Remission for ABSD) Rules and the Stamp Duties (Housing Developers) (Remission of ABSD) Rules, subject to conditions. In addition to this 35% ABSD rate, the non- remittable component remains unchanged at 5%,” the government said.

Meanwhile, the highest applicable ABSD rate will apply for purchases made jointly by two or more parties of different profiles.

The government also clarified that ABSD will still not affect “those buying an HDB flat or EC unit from property developers with an upfront remission if any of the joint acquirers/purchasers is an SC.”

TDSR threshold

The TDSR threshold will be tightened by 5%-points from 60% to 55%, applicable to loans “for the purchase of properties where the Option to Purchase is granted on or after 16 December 2021 and for mortgage equity withdrawal loan applications made on or after 16 December 2021.”

The revised TDSR will not affect borrowers with existing property loans granted before 16 December 2021 when refinancing their loans.

LTV limit

The LVT limit for HDB housing loans will be tightened to 85% from the previous 90% and will not apply to loans granted by financial institutions.

The revised LVT limit only applies to “new flat applications for sales exercises launched after 16 December 2021, and complete resale applications which are received by HDB from 16 December 2021 onwards.”

Apart from the three measures, the government will also increase public and private housing supply.