News: Property cooling measures all the more necessary amid economic crisis, Desmond Lee

Sep 17, 2020

“A home is a big ticket item and it’s for the well-being of Singaporeans that some of the measures are there,” said Mr Lee.

National Development Minister Desmond Lee believes the property cooling measures are necessary to safeguard the well-being of Singaporeans by encouraging prudence and caution in long-term commitments such as property acquisitions, reported TODAY.

He made the comment in response to PropNex Chief Executive Ismail Gafoor’s question on whether the government would consider relaxing some of the property cooling measures, during a dialogue session at the PropNex Mid Year 2020 Convention.

Though Mr Ismail noted that speculative activity within the local property market has been eliminated since the latest round of cooling measures in July 2018, he suggested tweaking the Additional Buyer’s Stamp Duty (ABSD) rule.

And while the market has remained steady since the start of the COVID-19 pandemic, he said this is largely due to pent-up demand, as the long-term outlook is grim.

According to URA data, non-landed private home sales rose for the fourth straight month in August to hit its highest level since September 2019.  

In addition, five HDB resale flats were sold for at least $1 million in August, while the average resale price of HDB flats last month across Singapore also climbed 2.1% year-on-year.

But with a subdued property market’s outlook expected in the longer-term, Mr Ismail urged the government to review the ABSD imposed on homeowners.

Currently, the ABSD stands at 12% of the property price for Singaporeans acquiring second and subsequent properties and 20% for foreigners for any property purchase.

He proposed tweaking the stamp duty for properties located within the Core Central Region. 

“Because it is a relatively hefty 20% ABSD on foreigners and the inflow is being very much reduced in the current situation, and moving forward it might (continue to) be the case because of the global outlook,” he said as quoted by TODAY.

Mr Ismail also called for the easing of the rule on ABSD remission for married Singaporean couples purchasing their second home. As part of the COVID-19 (Temporary Measures) Act, Singaporean couples can only get a remission for the second property if they sell their first home within a year.

However, upgraders often wait several years for the completion of their second homes. As such, many of them hurriedly sell their HDB flats to avoid paying the 12% ABSD, he said.

“In this process, they go through some challenges because when they sell their HDB, they’re going to rent or shift to their parents’, until they receive the Temporary Occupation Permit (for the second home).”

According to him, Singaporeans who can afford to acquire a second property within the local market should be supported so that they would not have to invest abroad, where they may end up risking their retirement funds since foreign policies and the currency policies are very different.

However, Mr Lee explained that it is important for Singaporeans to be very prudent and careful, especially when entering very long term commitments.

“A home is a big ticket item and it’s for the well-being of Singaporeans that some of the measures are there,” said Mr Lee, who took on the National Development Minister post after the General Election in July.

Nonetheless, he pointed that “no measure is perpetual” and that his ministry will continue to review and calibrate property rules as needed.

“We recognise that at some stages, (the measures) can cause some pain and friction to genuine homebuyers,” he said.

“We’ll continue to study those measures to see how we can enable those who are aspiring and have prepared well for the upgrade, to be able to do so while ensuring that we reduce the risk of speculation and runaway prices that will hurt everyone.”

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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