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Singapore Announces New Measures to Cool Property Market

 

Singapore Government had just announced a spate of new measures to cool off the property market that have continued to rise despite earlier efforts to slow it down.

Effective from today, buyers of residential properties who sell it within four years will have to pay a stamp duty (called seller stamp duty or SSD in short), up from the current requirement of three years. SSD is also increased from 3% previously to a maximum of 16%.

Loan-to-value limit has also been reduced to 60 percent of the new property’s value for individual buyers who are still servicing an existing loan, down from from 70 percent at the moment. For corporate investors, the LTV will be cut to 50 percent.

Singapore market has reacted negatively (as expected) to the news with all property counters tanking a fair bit. Major property stock like Capitaland is down 2.87%, City Development is down 4.40% and Kepland is down 2.66%. Smaller counters are running worse with Allgreen down 5.74%, SC Global down 5.36% and Wing Tai down 5.06%. The FTSE STI  Index is down 28.66 points.

Given the fact that Governments around Asia have kept on cooling the property markets, namely China, Hong Kong and Singapore, I believe it is best to avoid all property stocks for the time being. There will be very limited upside. Should the new measures not work and property prices start rising, you can be pretty sure the governments will step in with more drastic measures.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.