The Ministry of National Development announced a series of strong cooling measures targeting the resale public housing and private residential markets yesterday, aimed at curbing speculative activities that drive up real estate prices. Homeowners of private residential properties who purchase non-subsidized public housing must sell all their private residential units within six months. Previously, private homeowners were not required to do so when purchasing public housing. Data shows that currently, about half of private homeowners who purchase public housing choose not to sell their private properties. Private homeowners account for approximately 10% of the monthly transactions of resale public housing, averaging 3,000 to 4,000 units per year.
In addition, the regulations allowing homeowners of non-subsidized public housing to invest in private residential properties after purchase have been tightened. Homeowners of non-subsidized public housing cannot buy private residential properties for investment during the Minimum Occupation Period (MOP).
Singapore's Prime Minister Lee Hsien Loong mentioned the necessity to prevent the housing market from overheating during the National Day Rally. Minister for National Development Desmond Lee held a press conference after a joint statement was released by the Ministry of National Development, the Ministry of Finance, and the Monetary Authority of Singapore. He reiterated that the introduction of additional cooling measures is to ensure stability in the real estate market and to address the long-term housing needs of Singaporeans.
The minimum occupation period for non-subsidized public housing has been extended from three years to five years, during which homeowners cannot sell or rent out their public housing. This is to prevent speculators from profiting from the quick resale of public housing. (Previously, homeowners of non-subsidized public housing who took loans from the Housing and Development Board only needed to reside for two and a half years before selling, while those who took loans from banks or did not take loans could sell after residing for just one year.)
The cooling measures also extend to the private residential market. Currently, homeowners with at least one housing loan who purchase a second or subsequent private property must pay a minimum down payment increased from 5% to 10%, and the loan-to-value ratio limit has been reduced from 80% to 70%, meaning that financial institutions can lend no more than 70% of the property price to loan applicants. This means that buyers looking to upgrade or invest from public housing or private residential properties must put down more cash. First-time homebuyers who do not own public or private housing are not subject to the new measures, including those taking loans from financial institutions to purchase private properties, executing condominiums, or owners of medium-income apartments (HUDC), private public housing, and public housing.
Furthermore, the Seller's Stamp Duty on resale private properties has been further tightened, extending from one year to three years. Sellers who resell properties within three years of purchase must pay stamp duty. If resold within the first year, the seller must pay the full stamp duty, which is the same rate as the stamp duty paid when purchasing the property, i.e., 1% on the first S$180,000, 2% on the next S$180,000, and 3% on the remaining amount. If resold in the second year, the stamp duty payable is two-thirds of the total, and in the third year, it decreases to one-third, while resale after three years is exempt from stamp duty.
The number of homebuyers with a loan-to-value ratio of 70% or above has reached a new high.
In the past six months, the private residential market in Singapore has remained robust, with private residential prices rising by 38% over the past four quarters, surpassing the historical peak of the second quarter of 1996. The trend of homebuyers with a loan-to-value ratio of 70% or above continues to increase, exceeding the historical average high. As a result, the government has decided to introduce additional cooling measures to moderate market demand and encourage buyers to manage their finances prudently.
