In Singapore, the property cooling measures adopted by the Government in 2009-2013 are considered by economists “macroprudential measures,” because of their assistance in containing the property market bubble. The Singaporean Government showed real intrepidity by refusing to instate less drastic measures, such as interest rate increases, which, according to MAS Managing Director Ravi Menon, would have led to an inability to deal with the financial vulnerability arising from the large expansion of global liquidity since 2008, which resulted in increasing asset prices and huge capital inflows in Singapore’s economy. Menon made this statement at the inaugural Asian Monetary Policy Forum.
There is a large variety of cooling measures that have had a great impact on Singapore’s residential property market since their application, and some of the most important ones are:
14 September, 2009. The Interest Absorption Scheme is provided at project launches by property developers and banks, and allows deferment of the bulk of the purchase price until the TOP (Temporary Occupation Permit) of the project. This scheme, together with the interest-only housing loans, was dismissed in the case of all private properties as a cooling measure.
20 February, 2010. The Loan-to-Value limit was dropped from 90% to 80% for all home loans, with the sole exception of Housing and Development Board loans. On the same date, the SSD (Sellers’ Stamp Duty) was introduced for residential property sold within one year of purchase.
30 August, 2010. The Loan-to-Value limit was lowered from 80% to 70% for second properties. Minimum cash payments were raised from 5% to 10% for would-be home owners having one or more outstanding home loans, and the holding period for imposition of the SSD became three years, as opposed to the former one year.
14 January, 2011. The Loan-to-Value limit was lowered from 70% to 60% for second properties. In addition, the LTV limit for non-individual residential purchasers was lowered to 50%. Another cooling measure instated on the same date was the holding period for imposition of Sellers’ Stamp Duty, which was changed to four years.
8 December, 2011. On this date, the Additional Buyers’ Stamp Duty (ABSD) was introduced, with Singapore citizens purchasing a third or subsequent property paying 3%, Permanent Residents buying second and subsequent property paying 3%, and non-individuals and foreigners paying 10%. Furthermore, the ABSD is waived for developers that buy more than four residential units and follow through with the development of residential properties for sale. For eligibility, proof of development and sale within the last five years must be provided.
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