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Market barely had time to respond to new cooling measures

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Over a thousand unauthorised short-term stays reported between 2015 - 2017

The government has received 1,808 reports of unauthorised short-term accommodations (STA) in private residential units and 390 reports in housing board flats from 2015 to 2017

The Singapore government departed from its recent practice of announcing sensitive information on Fridays when it introduced its latest round of cooling measures on 5 July, which is a Thursday – barely giving the market time to think.

In a note, Withers KhattarWong partner Kenneth Szeto said announcements were supposed to be released on Fridays to provide a weekend buffer prior to the stock market reaction, reported Singapore Business Review.

“Buyers and sellers themselves barely had five hours to react to the announcement before implementation, and property launch show flats were immediately flooded, as buyers rushed to issue their sale options before midnight to come within existing rules – to either pay less Additional Buyers Stamp Duty (ABSD) or obtain higher quantum home loans,” he said.

“The ink has barely dried on the rules and regulations, and the usual accompanying tax guides are still being written. For parties who are engaged in ongoing deals, it will be necessary to look carefully at the impact of the new rules, and seek the necessary clarification with the tax authorities on how ongoing deals will be affected.”

Szeto noted that the revised housing loan limits will see first time home buyers fork out an additional five percent cash down payment on their purchases.

He expects this to “rein in buyers’ demand for both new launch properties as well as resale properties, just as the asking prices in the market are starting to gather momentum after four consecutive years of flat-lining or decline”.

So far, the latest round of ABSD rate increases are the highest. Szeto believes the new 25 percent ABSD payable by corporate entities, including property developers, will cool developers’ interest in purchasing en bloc sites for redevelopment.

“In recent months, even before the implementation of the measures, Singapore-based developers have already been observed to be more selective with site selection, and more conservative with bid prices,” he added.

 

Senior Content Producer, Christopher Chitty, edited this story.