reporter2
12-04-16, 19:00
http://www.straitstimes.com/forum/letters-in-print/do-property-curbs-help-or-hurt
Do property curbs help or hurt?
Apr 11, 2016
The Additional Buyer's Stamp Duty (ABSD) of up to 15 per cent is for the purchase of investment properties and serves as a housing tax for foreigners. Meant to reduce the "investment viability" of properties and give owner-occupiers a higher chance of buying a home, buying a second property became a more expensive affair because of it.
Before the cooling measures were introduced, mass-market properties primarily catered to HDB upgraders and first-time home buyers, while higher-end properties were more for higher-income earners, investors and expatriates.
The ABSD made the second group turn to mass-market properties, pushing up prices in this market.
The rising Singapore interbank offered rate (Sibor), which is used to price home loans, could damage livelihoods, as mortgage payments rise in tandem with it.
Traditionally, if mortgage payments start getting too high, owners would sell off the property and/or downgrade, to reduce debt exposure and reallocate resources.
With the absence of liquidity in the market, this will be difficult.
The property auction market is also starting to get uncomfortably active. Last year, mortgagee sales - when a bank puts a property up for auction after its owner defaults on servicing the home loan - almost doubled the preceding year's figure ("More homes go on the block amid market turmoil"; Feb 19).
Together with the bleak economic outlook and weak equities market, if we blindly stick to the status quo, we are in for a rough year ahead.
Russell Lee Pynn
Do property curbs help or hurt?
Apr 11, 2016
The Additional Buyer's Stamp Duty (ABSD) of up to 15 per cent is for the purchase of investment properties and serves as a housing tax for foreigners. Meant to reduce the "investment viability" of properties and give owner-occupiers a higher chance of buying a home, buying a second property became a more expensive affair because of it.
Before the cooling measures were introduced, mass-market properties primarily catered to HDB upgraders and first-time home buyers, while higher-end properties were more for higher-income earners, investors and expatriates.
The ABSD made the second group turn to mass-market properties, pushing up prices in this market.
The rising Singapore interbank offered rate (Sibor), which is used to price home loans, could damage livelihoods, as mortgage payments rise in tandem with it.
Traditionally, if mortgage payments start getting too high, owners would sell off the property and/or downgrade, to reduce debt exposure and reallocate resources.
With the absence of liquidity in the market, this will be difficult.
The property auction market is also starting to get uncomfortably active. Last year, mortgagee sales - when a bank puts a property up for auction after its owner defaults on servicing the home loan - almost doubled the preceding year's figure ("More homes go on the block amid market turmoil"; Feb 19).
Together with the bleak economic outlook and weak equities market, if we blindly stick to the status quo, we are in for a rough year ahead.
Russell Lee Pynn