The surge in private home prices and HDB resale prices has prompted the Singapore government to introduce a new round of cooling measures.
Announced late on Wednesday (Dec 15), this new round of measures will affect the Singapore real estate market.
Despite the economic impact of the COVID-19 pandemic, Singapore’s property market has been booming.
Here are the new changes you need to know:
1. What are the new measures?
- The Additional Buyer’s Stamp Duty (ABSD) will be raised. ABSD is a tax levied on the purchase of second and subsequent residential properties.
- The Total Debt Servicing Ratio (TDSR) threshold, which limits the amount of an individual’s monthly income that can be spent on repaying debts, will be tightened, reducing the housing loan amount for borrowers.
- The HDB loan limit will also be lowered.
2. When do these new measures take effect?
- These measures will take effect from Thursday (Dec 16, 2021).
3. How will the higher stamp duties affect homebuyers?
- For citizens buying their second residential property, the ABSD rate will be raised from 12% to 17%. For their third and subsequent properties, the rate will increase from 15% to 25%.
- For Permanent Residents (PRs) buying their second residential property, the ABSD rate will go up from 15% to 25%. If they buy a third or subsequent residential property, the rate will increase from 15% to 30%. The 5% ABSD rate for PRs buying their first residential property remains unchanged.
- For foreigners buying any residential property, the ABSD rate will be raised from 20% to 30%.
- For entities, including developers, the ABSD rate will be increased from 25% to 35%.
4. How will the stricter loan limits affect private home buyers?
- The TDSR threshold will be tightened from 60% to 55%. This means that the monthly repayment for new mortgage loans cannot exceed 55% of the borrower’s income.
5. Will refinancing for home loans be affected?
- Existing home loans granted before Dec 16 will not be affected by the revised TDSR limit when refinancing.
- The TDSR also does not apply to the refinancing of owner-occupied home loans.
- The TDSR applies to existing investment property loans, but borrowers affected by the COVID-19 pandemic have been granted temporary TDSR exemptions.
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