We live in a country where the cost of living is constantly on the rise. Between next year and 2025, the goods and services tax (GST) is slated to increase to 9%. As of October, the certificate of entitlement (COE) prices also surged due to a supply shrinkage.
But that isn’t all, as those in the loop would have known that our property has also been increasingly expensive.
Sadly, the only thing that has been on a steady plateau is our salary and bank accou-
To cope with the escalation of property prices, our Gahmen has stepped in to introduce several “cooling measures”. Read on to find out everything you need to know about the new rules in the property market.
Property Buyers Are to Pay Higher Stamp Duties
With effect from today (16 Dec), the additional buyer’s stamp duties (ABSD) will be increased when paying for additional properties.
Exactly how much more, you may ask?
For citizens buying their second residential property, the ABSD rate will increase from 12% to 17%. For those purchasing their third of subsequent properties, the increase will be from 15% to 25%.
As for permanent residents (PR), the increment of stamp duties will be slightly higher.
For PRs buying their second residential property, the ABSD rate will be increased to 25%, up from the previous 15%. Should they purchase their third and subsequent properties, the rate will rise from 15% to 30%.
With regards to foreigners, buying of any property (first or 100th, it doesn’t matter) in Singapore will require them to fork out an ABSD rate of 30%. Previously, it was 20%.
Total Debt Servicing Ratio Threshold will be Tightened
To further clamp down on the rise of property prices, the total debt servicing ratio (TDSR) threshold will be reinforced from 55% to 60%. This move limits the amount a person can spend on monthly instalment payments.
The updated TDSR threshold apply to the following:
- Loans for the purchase of properties where the Option to Purchase (OTP) is granted on or after 16 Dec 2021
- Mortgage equity withdrawal loan applications made on or after 16 December 2021
If you have been granted a loan before 16 December, you will not be affected by the revised TDSR threshold when refinancing your loans.
Why This Surprise Move?
A joint statement was released last night by the Finance Ministry, National Development Ministry, and Monetary Authority of Singapore. In the media release, it was stated that the Gahmen has been closely monitoring the property market for several quarters during the pandemic.
Since the first quarter of 2020, private housing prices have increased by approximately 9%. Additionally, HDB resale flat prices rose about 15% since 1Q 2020.
Since the construction of Built-to-Order (BTO) flats is being delayed, it’s not surprising that some couples are turning their options to resale flats instead.
If this situation further escalates, authorities worry that prices could “run ahead of economic fundamentals, and raise the risk of a destabilising correction” later on. To add on, borrowers would be placed in a precarious state of a possible rise in interest rates in the future.
In short, these sets of new measures are here in an attempt to promote greater affordability to our housing.
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