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New Cooling Measures from 6th of July 18

New Property Cooling Measures from 6th of July 2018 | Market Update

New raised ABSD & tightens loan-to-value limits in moves to cool property market

Another Heavy Punch

There are many bad news for property buyers in 2018. The first cooling measure that Singapore Government introduced this year  which commence from 20th of February 2018 to increased the top marginal Buyers’ Stamp Duty (BSD) from 3 to 4 percent for residential properties over S$1 million. This measure however had not made a big impact to the property market or even slow it down a bit.

The market was still overwhelmed by the En bloc fever created by the hungry developers craving for land. We start to see sign of rebound since 3rd quarter 2017 and for the next 3 quarters had also give positive gains in the Private Residential Market. This is after 15 quarters of downs however the prices increased sharply by 9.1 percent over the past 3 quarters.

We have seen many projects sell out or produced very good sales during their launches. Maybe too good which everyone is shouting about the Private Residential Market had finally see light and we are now in the start of a up trend. It was so loud that is spread to our governments ears. Loud enough to spark their concerns that the market may be overheated and thus announce another HEAVY PUNCH on 5th of July 2018.

Starting from 6th of July 2018, There will be a drastic adjustment to the Additional Buyer’s Stamp Duty (ABSD) rates and Loan-to-value (LTV) limits on residential property purchases, to cool the property market and keep price increases in line with economic fundamentals.

This cooling measure was announced just 2 days before Riverfront Residences‘s Balloting date which is scheduled to be on the 7th of July 18. Afraid the new measures may turn away many buyers, Oxley immediately reacted by open for sale hours after the measures is announced. Other two project Park Colonial and Stirling Residences follow suit although their balloting day is scheduled a week later. Buyers of all these three developments rushed down to make their booking to save on the Additional Buyer Stamp Duty (ABSD) and also new LTV.

Measures Details

Increase Of ABSD Rates

  1. Increase ABSD from 7% to 12% for Singapore Citizens buying second residential property
  2. Increase ABSD from 10% to 15% for Singapore Permanent Residents buying second residential property
  3. Increase ABSD from 15% to 20% for Foreigners buying any residential property
  4. Increase ABSD from 15% to 25% for Entities buying any residential property
  5. Introduce an additional ABSD of 5% that is not-remittable under the Remission Rules 1 (payable on the purchase price or market value, as applicable) for developers purchasing residential land for housing development.

The following table 1.1 will summarise the adjusted ABSD Rates.

Rates On Or Before 5th July 2018

Rates On Or After 6th July 2018

Singapore Citizens (SCs) buying first residential property

o%

o%
(No Change)

Singapore Citizens (SCs) buying second residential property

7%

12%
(Revised)

Singapore Citizens (SCs) buying third residential property

1o%

15%
(Revised)

Singapore Permanent Residences (SPRs) buying first residential property

5%

5%
(No Change)

Singapore Permanent Residences (SPRs) buying second and subsequent residential property

10%

15%

(Revised)

Foreigners buying any residential property

15%

2o%

(Revised)

Entities buying any residential property

15%

25% (Revised) #

Plus additional 5% for developers^
(New, Non-remittable)*

Table 1.1 ABSD Summarised Table

# As entities, developers will also be subject to the ABSD rate of 25% for entities. Developers may apply for remission of this 25% ABSD, subject to conditions (including completing and selling all units within the prescribed periods of 3 years or 5 years for non-licensed and licensed developers respectively). Details are provided under the Stamp Duties (Non-licensed Housing Developers) (Remission of ABSD) Rules and the Stamp Duties (Housing Developers) (Remission of ABSD) Rules.
^ Developers refer to entities which engage in the business of construction and sale of housing units.
* This new 5% ABSD for developers is in addition to the 25% ABSD for all entities. This 5% ABSD will not be remitted, and is to be paid upfront upon purchase of residential property.
1 Stamp Duties (Non-licensed Housing Developers) (Remission of ABSD) Rules and Stamp Duties (Housing Developers) (Remission of ABSD) Rules

Other ABSD Conditions To Take Note

  1. If you are buying the residential property with 2 or more parties of different profiles, the highest applicable ABSD rate will apply. However, full ABSD remission will continue to be provided for joint purchase of the first residential property by married couples with at lease one SC spouse.
  2. Married couple with at lease one Singapore Citizen spouse who purchased their second residential property can still apply for a refund of ABSD, as long as they dispose off their first residential property within 6 months after the date of purchase of the second property or the issue date of the TOP or CSC of the second residential property, whichever is earlier. [This applies for Building Under Construction (BUC) properties]
  3. There will be a transitional provision for cases where an Option to Purchase (OTP) has been granted by sellers to potential buyers on or before 5 July 2018, and this OTP has not been varied on or after 6 July 2018. For such cases, the current ABSD rates, instead of the revised ABSD rates, will apply if the OTP is exercised within 3 weeks of this announcement (i.e. exercised on or before 26 July 2018) or the OTP validity period, whichever is earlier.

Tightening of Loan-To-Value (LTV) Limits

LTV limited will be reduced by 5% for all housing loans granted by financial institution except HDB Loans.

Other LTV conditions to take note

  1. The new LTV limits will apply to loans for the purchase of residential properties where the OTP is granted on of after 6th of July 18
  2. In oder to be inline with the new LTV limits for the housing loans, LTV limits for mortgage equity withdrawal loans (MTWLs) will be tightened as follows:
    • Borrowers with no outstanding housing loan for the purchase of their 2nd or subsequence property can borrow up to 75% of the property value
    • Borrowers with an outstanding housing loan can borrow up to 45% for the purchase of 2nd property
    • The new LTV limits will apply to MWL applications made on or after 6th July 2018

The following Diagram 1.2 will summarise the Revise LTV Rates

New Cooling Measure from 6th of July 18 LTV Summarised Table

Diagram 1.2 New LTV Summary