Government unveils 3 new property cooling measures

If left unchecked, property prices could raise the risk of destabilising

The government has unveiled three new measures to cool down Singapore’s property market.

The package of measures comprise of the raising of Additional Buyer’s Stamp Duty (ABSD) rates and tightening of Total Debt Servicing Ratio (TDSR) threshold and Loan-to-Value (LTV) Limit.

The government said prices for both private housing and HDB resale flats have risen by about 9% and 15%, respectively, since the first quarter of 2021.

Whilst these figures remain to be “below their historical averages,” the government said they are seeing a “clear upward momentum” in property prices.

“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 government added.

Here’s a summary of all the measures which took effect on 16 December 2021:

Revised ABSD rate

The government said ABSD rates will remain at 0% for Singapore Citizens (SCs) and 5% for Singapore Permanent Residents (SPRs) when they purchase their first residential property.

ABSD rate, however, will be raised to 17% for SCs second residential purchase, 25% on their third and subsequent purchases.

For SPRs, the rate will be raised to 25% on their second purchase, and 30% on their third and subsequent purchases.

Rate will also be raised to 30% for foreigners purchasing any residential property; and 35% for entities purchasing any residential property and developers purchasing any residential property.

Meanwhile, the highest applicable ABSD rate will apply for purchases made jointly by two or more parties of different profiles.

The government also clarified that ABSD will still not affect “those buying an HDB flat or EC unit from property developers with an upfront remission if any of the joint acquirers/purchasers is an SC.”

TDSR threshold

The TDSR threshold will be tightened by 5%-points from 60% to 55%, applicable to loans “for the purchase of properties where the Option to Purchase is granted on or after 16 December 2021 and for mortgage equity withdrawal loan applications made on or after 16 December 2021.”

LTV limit

The LVT limit for HDB housing loans will be tightened to 85% from the previous 90% and will not apply to loans granted by financial institutions.

SG ranks 30th in Social Progress Index

Singapore ranked 30th out of 168 countries in Deloitte’s Social Progress Index (SPI) 2021, from 29th out of 163 countries in the previous year.

The Lion City ranked first amongst its Southeast Asian neighbours, ahead of Malaysia (51), Thailand (71), Indonesia (94), Vietnam (78), the Philippines (97), Cambodia (128), Myanmar (117), and Laos (145).

The annual ranking, compiled by Social Progress Imperative with Deloitte, ranks the countries based on 12 categories: basic medical care; water and sanitation; shelter; personal safety; access to basic knowledge; access to information and communications; health and wellness; environmental quality; personal rights; personal freedom and choice; inclusiveness; and access to advanced education.

This year’s index specifically examined the relationship between sustainability and social progress.

Out of the 12 categories, Singapore improved the most in environmental quality, and health and wellness, jumping to 82 points in 2021 from 76.98 last year, and 91.01 from 90.36, respectively.

The country was also able to maintain its high scores in water and sanitation (95.83), nutrition and basic medical care (97.81), shelter (96.48), personal safety (96.15), and access to basic knowledge (91.05).

The index also said Singapore’s scores for 2021 was “relative to 15 countries of similar Gross Domestic Product (GDP) per capita” namely Qatar, Ireland, Luxembourg, Switzerland, United Arab Emirates, Norway, the United States, Netherlands, Denmark, Iceland, Austria, Germany, Sweden, Belgium, and Kuwait.

SG ranked 1st amongst its SEA neighbors in Deloitte’s Social Progress Index