Singapore tightens curbs to cool the buoyant property market

December 17, 2021: -On Wednesday, Singapore announced a package of measures to cool its property market, including raising stamp duties and tightening loan limits. The private residential and public housing resale markets have been buoyant, despite the economic impact of Covid-19, the government said in a statement.

Private housing prices have risen by nearly 9% since the first quarter of 2020, while public housing resale flat prices have increased by almost 15%.

In Singapore, where real estate is a haven investment for wealthy foreigners, authorities keep close tabs on property prices to ensure housing remains affordable for locals and stays in step with economic fundamentals.

“If left unchecked, prices could run ahead of economic fundamentals and raise the risk of a destabilizing correction later on,” said the joint statement by the Finance Ministry, the Ministry of National Development, and the central bank.

“Borrowers would also be vulnerable to a possible increase in interest rates in the coming years.” The measures will come into effect on December 16.

Among the measures, the government will raise the additional buyer’s stamp duty for foreigners to 30% from the current 20%.

It will increase the rate for citizens buying their second homes to 17% from 12%, while for third and subsequent homes, the rate goes to 25% from 15%.

The ABSD for permanent residents to buy a second home will increase to 25% from 15%, while for third and subsequent homes, it is revised to 30% from 15%.

Entities will have to pay ten percentage points more at 35%. Singapore last increased ABSD rates in 2018.

The government will tighten the total debt servicing ratio threshold to 55% from 60% and increase public and private housing supply.