Singapore imposes new residential property cooling measures

Singapore public housing blocks in 1968; unknown location.Singapore public housing blocks in 1968; unknown location. Taken by Leonard Shaffer.

Singapore announced early Thursday a new package of measures to cool the private and public residential property markets, effective immediately.

The measures include increasing the Additional Buyer’s Stamp Duty (ABSD) rates and changes to loan-to-value limits.

“The government has been closely monitoring the property market for several quarters. The private residential and HDB resale markets have been buoyant, despite the economic impact of Covid-19,” the Ministry of Finance (MOF), Ministry of National Development (MND) and the Monetary Authority of Singapore (MAS) said in a joint statement published to MAS’ website.

“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 statement said.

Private housing prices have risen by around 9 percent since the first quarter of 2020, and HDB resale flat prices are up around 15 percent over the same period, while transaction volumes have also been high amid a low interest rate environment, the statement said.

The measures are intended to dampen broad-based demand, especially for those seeking property for investment rather than owner occupation, the statement said.

The government said it also plans to increase the supply of both public and private housing.

Raising the ABSD

The current Additional Buyer’s Stamp Duty (ABSD) rates will be raised to 17 percent from 12 percent for Singapore citizens buying their second residential property, and to 25 percent from 15 percent for those buying a third property or more.

For permanent residents, the ABSD for the second property will rise to 25 percent to 30 percent for the third or more properties; both rates were previously 15 percent.

Foreigners will see their ABSD rise to 30 percent from 20 percent for any residential property.

The total debt servicing ratio (TDSR) will be tightened to 55 percent from 60 percent.

For public housing, the loan-to-value limit will be tightened to 85 percent from 90 percent.

Read more details of the new measures.