Singapore Considers Cooling Down The Real Estate Market

With the local economy started to turn more favorable, the Singapore property market has finally showed signs of life. However amidst all the noises and optimism, Singapore government has declared in November 2009 that it is considering calibrated measures to contain the rise of the real estate market. Market activities have picked up considerably and economists are busy painting a rosy picture on real estate transactions in the coming months.

Perhaps the memory of the sudden boom and bust in the mid nineties is still fresh in the administration’s mind. And this time round, the government is more determined to prevent such a sharp uptake and potentially followed by equally quick reversal of the market.

The Singapore government has quite a few options at their disposal and they are land supply strategy, credit tightening and taxation policies. We will go over each of these in more details.

Land Offer decision – This might be the most effective tool in the fight against the red hot demand for all types of real estate in Singapore. As the government to reduce the release of land for new developments, it will certainly slow down the offer for new projects launched in the market, so that unreasonable restrictions on real estate speculation.

Financing – Recently there have been speculations in the market that government may review the guidelines for financial facilities such as private housing loan.Market players and speculators would be hard hit if this amount is brought back to 80 percent of purchase price.Currently the maximum loan amount a lender can approve to a qualified private house buyer is 90 percent.

Taxation Policies – As the Government of the options for action in the housing market, this feature is probably somewhere in the plan. The tax on capital income has always been a convenient tool in the past in the fight against the excessive exploitation of living in Singapore. And when it relaunched, this would certainly affect the market in a big way.

Raise Property Tax – In general those owner-occupiers in Singapore currently pay half of this amount. These folks may be subjected to a higher tax than the current 10 percent.It could also be a focused approach targeting property investors and speculators.

Double Stamp Duty – Again, this might be for the slowdown in the market speculators as the stamp tax effective would be imposed if he decides to buy or sell a property.

However it is still early days to tell if the government would exercise its option as the market is still directionless at the moment. So there you have it, a quick list of possible measures to fight the potentially overheated property market.

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