As the local economy works to shrug off the scars of the recent financial meltdown and the H1N1 Influenza, Singapore property market has been the darling of the moment. In the last two years, property transactions are close to its record peak and market analysts have nothing but nice commentary about real estate market in the coming months. But in the middle of all these optimism, Singapore government has raised the alert in November 2009 that it is worried about a repeat of the’96 boom buzz cycle.
Now more knowledgeable and more alert, government is not about to get caught again in another similar situation. Older Singaporeans would no doubt remember the mid nineties property craze, perhaps more so for people who got burned by it subsequent and sharp retraction.
Aside from the market driven philosophy, the Singapore property sector can be influenced by quite a few legislations, some of them include land supply, credit control and tax policies.Let’s try to understand each of them and study the possible implications.
Land Supply Strategy – This has always been use to good effect by the government to contain the over zealousness of super bullish developers. As government releases less land for residential and industrial development, this would slow down the supply for new commercial buildings as well as residential projects, hence reducing the speculative play on new launches.
Credit – Another effective control can be the tightening of money supply. There has been news making rounds in the property sector that government is considering to review the lending guidelines for purposes of private housing loan. Current laws allowed for up to 90 percent of purchase value to be disbursed to qualified buyers. The fear is that this amount may be brought back to the 80 percent level, or worse 75% level.
Capital Gain Tax – It was first introduced in mid nineties to curb over speculation but was subsequently abolished.It has been a powerful tool during the mid nineties to counter excessive speculation in Singapore market. Government may consider enforcing laws to compel buyer who buys properties in this period to hold on for one year before releasing back to the market in order to be exempted from tax.If this is to be re-enforced, surely a lot of players would be hit hard. This can be one of the more drastic measures.
Property Tax – For example, buyers who do not conform to minimum stay requirement as in the above explanation may have to be subject to a higher tax than the existing 10 percent. Has selective implementation on property tax.For owner-occupiers, they typically pay less than half of this amount.
Two Way Stamp Duty – To pay two-way stamp duty is the buyer and seller stamp duty. Currently, only the buyer has to pay the stamp duty.
The top looks to use some of the possibilities of government can, in order to cool the overheated market. If you are active in real estate speculation, make sure to keep knowing developments.
|
|