Singapore Imposes More Measures to Curb Property Speculation

Singapore added more measures to curb speculation on residential and industrial properties after home prices climbed to a record and the value of logistics buildings doubled over the past three years.

The stamp duty for homebuyers will increase as of tomorrow by between 5 percentage points and 7 percentage points, the government said in an e-mailed statement today. Permanent residents will have to pay the additional tax when they buy their first home, while Singaporeans will have the levy starting with their second purchase, according to the statement.

The government has tried to rein in residential property prices since 2009. Before today’s measures, it barred interest-only loans for some housing projects, stopped allowing developers to absorb interest payments, imposed additional taxes on foreigners and companies buying properties, and moved to curb the trend of so-called shoebox apartments. In October, it also restricted home-loan maturities to 35 years and required tighter loan-to-value limits for loans exceeding 30 years.

“The reality we face is that interest rates are extraordinarily low, globally and in Singapore and continue to add fuel to our property market,” Tharman Shanmugaratnam, Singapore’s deputy prime minister, said in the statement. “We have to take this further round of measures now to check recent market trends and avoid a more serious correction in prices further down the road.”

Loan Limits

The government will also tighten the loan-to-value limits for buyers seeking a second mortgage, it said today, referring to the amount they are allowed to borrow relative to the value of their properties. The cash down payment will also rise to 25 percent from 10 percent starting from the second loan, it said.

Singapore will also cap bank loan repayments for public housing to 30 percent of the buyer’s monthly income, and restrict permanent residents from subletting their entire units of apartments sold by the government, it said.

The size of executive condominiums will be limited to 160 square meters (1,720 square feet), the government said. These apartments are built by private developers and come with income limits and other restrictions.

For industrial buildings, the government will introduce a stamp duty for sellers, starting at 15 percent if the property is sold within a year, it said.

Shoebox Apartments

In September, Singapore said it would cap the number of homes that can be developed in suburban projects to curb the increasing trend of what have been dubbed shoebox apartments, or units smaller than 50 square meters.

The island city-state in December 2011 imposed an additional 10 percent stamp duty on foreigners and corporate entities. The levy is 3 percent for permanent residents purchasing a second home and for citizens buying their third residence. The government earlier required a 1 percent duty on the first S$180,000 ($147,000) of the price, 2 percent on the next S$180,000 and 3 percent for the remainder.

Singapore home prices climbed to a record in the fourth quarter after developers sold more homes. The private residential property price index rose 1.8 percent to 211.90 points in the three months ended Dec. 31, according to preliminary estimates released by the Urban Redevelopment Authority on Jan. 2.

CapitaLand Ltd., Southeast Asia’s biggest developer, fell 1.3 percent to S$3.89 while City Developments Ltd., Singapore’s second-largest builder, slid 0.3 percent to S$12.60.

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