I didn’t do National Service so I can live in a one-room flat and subsist on $0.80 Yan Yan snacks. It’s about time I saw some rewards for citizenship. “Dude, you live that way because you’re a cheap-ass, not because you’re poor.” Actually, it’s because I was saving up for private property, which in 2012 cost slightly more than your own aircraft carrier. But thanks to new cooling measures, I may soon be resting my (luckily Singaporean) butt in my private condo:
The Ultimate Hand-Out: Cooling Measures 2013
Imagine the jackpot machines at RWS had cheat codes, and someone just gave them to you. That’s how most Singaporean citizens* should have felt, when they announced the cooling measures.
Well, at least the ones who are first time home buyers. There are some huge benefits here, like:
- Foreigners Aren’t Pricing Us Out of the Market Anymore
- Speculators Aren’t Pricing Us Out of the Market Anymore
- There’s a Clear Benefit to Citizenship
- Satisfaction Knowing That Some of Us Didn’t Spend 2.5 Years Crawling in a Jungle Without a Damn Good Reason
*Exceptions include Singaporean property developers, agents, and anyone who was in a showroom last Friday. I hope those shoe marks from the stampede clear up soon.
1. Foreigners Aren’t Pricing Us Out of the Market Anymore
How about I come down with 40 of my friends, and we’ll crash at your place indefinitely? And while we’re at it, we’ll take the beds and sofas. You get a spot on the kitchen floor.
That’s what our residential scene felt like, from 2011 – 2012. We had rich foreigners buying every Singaporean house in sight, and at insane prices. With places like Europe and America in financial crisis, this was one of the safest place to put money.
In response, local property developers came to expect (and charge) prices that most of us couldn’t afford without a 2,000 year loan tenure. Singaporeans were slowly being pushed from central regions, and into the cheaper heartlands. If not for government intervention, I suspect we’d be sleeping on sampans and paying docking charges by 2050.
Even now, the idea of a private condo is a distant dream to many citizens. But with the new measures, we’ve brought that dream a little bit closer to reality.
Because foreigners pay 15% ABSD (Additional Buyers Stamp Duty) on all property purchases. Permanent Residents pay 5% ABSD (first purchase). Singaporean citizens pay nothing (first purchase). This dissuades foreigners and PRs from buying, which might just lower property prices.
2. Speculators Aren’t Pricing Us Out of the Market Anymore
Foreigners and PR (Permanent Resident) buyers were far from the sole cause. Some Singaporean citizens contributed just as much to the problem.
Local property developers, landlords, property agents and house flippers (yes, there’s a way around the Seller’s Stamp Duty) kept fueling the fire. We could see what was happening, but stuff you conscience, there’s money to be made, right?
Hence the new loan restrictions and ABSD.
Notice that even Singaporean citizens pay ABSD (7% on the second property purchase, 10% on the third). In addition, the minimum down payment on the second or later property is 25%.
I know speculators usually have money; but at an average down payment of $250,000+, I daresay most of them have backed off. Maybe now, those of us who need houses to actually live in will have a fair shot.
3. There’s a Clear Benefit to Citizenship
PRs are no longer allowed to sublet their whole flat. Further, they’re required to sell their flat if they ever upgrade to private property.
Singaporean citizens, on the other hand, can keep their flats when they upgrade (if they meet the minimum occupancy period). They can also rent the whole flat afterwards.
Maybe the full significance of this advantage hasn’t sunk in. So let me put it this way: It’s about as fair as using a chauffeured Ferrari in a sack race. The new measure means some Singapore citizens have, after five years, real potential to become landlords.
And when they do become landlords, there’ll be fewer PRs competing with them. With some prudent property investments, that makes HDB flats an easy cash generating asset. (PS: If you need tips with that, follow us on Facebook!)
And for Permanent Residents who think that isn’t right, well…what can I say? It’s not as if we don’t have to earn that citizenship.
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