Falling GDP and declining exports have forced the Singapore government to remove property cooling measures to aid the worsening economy. Effective immediately from the announcement yesterday (Mar 10), all home owners will not have to pay the Seller’s Stamp Duty (SSD) if the property is sold after 3 years of ownership – down from 4 years. The SSD rate will also be lowered by 4% for each tier – 4% for the 3rd year of ownership, 8% for the 2nd year ad 12% for the 1st year of ownership. Property speculators will now also have easier access to credit and loans by having the Total Debt Servicing Ratio (TDSR) reduced.
The news prompted a surge in property stocks with the country’s largest listed developer CapitaLand jumping 6.2%, and another, CityDevelopment, jumping 10.2%. The property counters created a 0.5% gain for the Straits Times Index, offsetting losses in all other sectors.
Removal of the property cooling measures will also increase housing prices for first-time homeowners in the Built-to-order (BTO) category, as the HDB housing is benchmarked to market prices. A typical housing loan is around 25 years, and as the debt feeds on the majority of a Singaporean’s CPF retirement account, most Singaporeans are unable to retire by the official retirement age of 65.
The increase in housing prices also coincides with the new 30% hike in water prices and introduction of new taxes announced in the Budget, making 2017 a year of price hikes created domestically by the Singapore government. As the next General Election is 3 years away in 2020 and the coming Presidential Election a walkover for president-select Halimah Yacob, there is no political pressure for the ruling party to rein on price hikes.