Singapore moved yesterday to discourage short-term speculative real estate investing as property prices soar to record highs amid a rapid economic recovery.
Bank loans for second homes will now be limited to a maximum of 70 percent of the value of the property, down from 80 percent previously, the Ministry of National Development said. The government will also impose a tax on houses sold within three years of purchase, up from one year.
“The property market is currently very buoyant,” the ministry said in a statement. “The government has decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.”
Prices of private residential housing rose to a record high in the second quarter, fueled by a surging economy that expanded 18 percent in the first half as manufacturing rebounded from last year’s global recession.
Singapore’s low crime rate, good schools and low personal and corporate taxes have helped the city-state rank near the top of expatriate global quality-of-life surveys and attracted investors to the residential and office property markets.
“Should economic growth falter and the market corrects, property buyers could face capital losses, with implications on their own finances and the economy as a whole,” the ministry said. “The current low global interest rate environment will not continue indefinitely.”
The government earlier this year imposed a 1 percent to 3 percent tax on residential properties sold within one year of purchase and lowered the loan-to-value limit to 80 percent from 90 percent on loans for private housing. Officials have also pledged to release more land for development. Private residential property prices rose 11 percent in the first half, the ministry said.
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