Arcachon
09-08-18, 19:56
https://www.iproperty.com.sg/news/a-laymans-explanation-of-what-the-new-property-cooling-rules-will-do-to-you/
iProperty Singapore
iProperty Singapore
20 JUL 2018
PROPERTY INSIGHTS SINGAPORE PROPERTY NEWS BUY CONDO FINANCE HDB INVEST
You’ve probably heard of the new property cooling measures being announced, and heard terms like ABSD and Loan-to-Value (LTV) being thrown around.
Perhaps you’ve also received videos of people swamping condominium show flats and panic buying.
Many people know about the increase in Stamp Duties, but what do all the property cooling measures actually mean for normal humans like you and me? I’m here to help you break it down!
A break in the En-Bloc Fever
A large number of En-Bloc sales were triggered in recent times by large overseas developers. The new property cooling measures would put a huge 30% ABSD on the developers, meaning that many would consider stepping on the brakes of their En-Bloc plans.
This means that if you own an apartment in an older condominium that failed to En-Bloc, the developers might not want to try again.
Foreign Property Buyers will think twice
Brookvale Park. Picture: iProperty
For foreigners looking to buy, you’ll be tagged with a 20% ABSD fee on top of your purchase price. This makes plenty of properties unpalatable to foreigners who are looking to make a rental yield investment purchase, as it would make yields here less attractive.
This is great news for locals who are looking to upgrade, as a lower demand from foreign investors mean you have a chance to capitalise.
Of course, if you are a local investor considering rental yields, you’re better off looking at other markets for it.
Related: Latest property curbs aimed at reining in en bloc sales and speculative purchases
Local Buyers Must Manage Cashflow Better
Loan to Value (LTV) is tightening with these new rules. What this means is that you can borrow less to fund your home or investment. Interestingly, this rule applies to private property only, as HDB LTV limits have stayed the same.
For the first private property, the LTV is now 75%, or 55% if the loan tenure is more than 30 years or extends past age 65. This is 5% down from the previous rules. While 5% might not sound like a lot, this means you might have to pay more upfront for the purchase, so you will need to plan your cashflows accordingly.
Related: Managing home loans and interest rates
Buyer Bargaining Power will increase
The laws surrounding property developers and the increase in costs for buyers have conspired to create an environment where buyers are getting better prices for their purchases.
At Logan Property and Nanshan Group’s Stirling Residences, the developers have already adjusted their pricing following the initial release of 380 units at the 1,259-unit project.
There are already discounts being offered in many developer show flats to help offset the increased ABSD and tightened loans. Add the risk of potential fines to the developer if they fail to sell out their units within a fixed timeline, and you can see how this is shifting into a buyers market.
Related: Developers offering discounts to relief buyers of bite from stamp duty hikes
Property is no longer the Investment it used to be
It’s very much an Asian thing to buy properties and treat them as a store for value. Everyone has some relative that has 3 or 4 condominiums earning them “passive income” from rentals. Many of us have also heard of people who have “flipped” properties for a windfall.
This cooling measure has made one thing very clear: Those days are over.
Gone are the days where your property will double in value in 20 years time. A $2 million home today would not likely be $4 million when you decide to sell it away in 2038.
Singaporean property was your parent’s gravy train to financial freedom, but that train has long left the station. It’s time to find something else to grow your money.
Only the beginning
This is not the end of the government’s drive to keep prices in check. In land locked Singapore, property prices need to be managed actively in order for Singapore to avoid Hong Kong’s fate. We’re adding more people to the country’s population, and with that, a rising demand for living space will be expected.
As developers respond to this demand, expect the government to adjust policy in order to stem rising prices and shrinking home sizes.
iProperty Singapore
iProperty Singapore
20 JUL 2018
PROPERTY INSIGHTS SINGAPORE PROPERTY NEWS BUY CONDO FINANCE HDB INVEST
You’ve probably heard of the new property cooling measures being announced, and heard terms like ABSD and Loan-to-Value (LTV) being thrown around.
Perhaps you’ve also received videos of people swamping condominium show flats and panic buying.
Many people know about the increase in Stamp Duties, but what do all the property cooling measures actually mean for normal humans like you and me? I’m here to help you break it down!
A break in the En-Bloc Fever
A large number of En-Bloc sales were triggered in recent times by large overseas developers. The new property cooling measures would put a huge 30% ABSD on the developers, meaning that many would consider stepping on the brakes of their En-Bloc plans.
This means that if you own an apartment in an older condominium that failed to En-Bloc, the developers might not want to try again.
Foreign Property Buyers will think twice
Brookvale Park. Picture: iProperty
For foreigners looking to buy, you’ll be tagged with a 20% ABSD fee on top of your purchase price. This makes plenty of properties unpalatable to foreigners who are looking to make a rental yield investment purchase, as it would make yields here less attractive.
This is great news for locals who are looking to upgrade, as a lower demand from foreign investors mean you have a chance to capitalise.
Of course, if you are a local investor considering rental yields, you’re better off looking at other markets for it.
Related: Latest property curbs aimed at reining in en bloc sales and speculative purchases
Local Buyers Must Manage Cashflow Better
Loan to Value (LTV) is tightening with these new rules. What this means is that you can borrow less to fund your home or investment. Interestingly, this rule applies to private property only, as HDB LTV limits have stayed the same.
For the first private property, the LTV is now 75%, or 55% if the loan tenure is more than 30 years or extends past age 65. This is 5% down from the previous rules. While 5% might not sound like a lot, this means you might have to pay more upfront for the purchase, so you will need to plan your cashflows accordingly.
Related: Managing home loans and interest rates
Buyer Bargaining Power will increase
The laws surrounding property developers and the increase in costs for buyers have conspired to create an environment where buyers are getting better prices for their purchases.
At Logan Property and Nanshan Group’s Stirling Residences, the developers have already adjusted their pricing following the initial release of 380 units at the 1,259-unit project.
There are already discounts being offered in many developer show flats to help offset the increased ABSD and tightened loans. Add the risk of potential fines to the developer if they fail to sell out their units within a fixed timeline, and you can see how this is shifting into a buyers market.
Related: Developers offering discounts to relief buyers of bite from stamp duty hikes
Property is no longer the Investment it used to be
It’s very much an Asian thing to buy properties and treat them as a store for value. Everyone has some relative that has 3 or 4 condominiums earning them “passive income” from rentals. Many of us have also heard of people who have “flipped” properties for a windfall.
This cooling measure has made one thing very clear: Those days are over.
Gone are the days where your property will double in value in 20 years time. A $2 million home today would not likely be $4 million when you decide to sell it away in 2038.
Singaporean property was your parent’s gravy train to financial freedom, but that train has long left the station. It’s time to find something else to grow your money.
Only the beginning
This is not the end of the government’s drive to keep prices in check. In land locked Singapore, property prices need to be managed actively in order for Singapore to avoid Hong Kong’s fate. We’re adding more people to the country’s population, and with that, a rising demand for living space will be expected.
As developers respond to this demand, expect the government to adjust policy in order to stem rising prices and shrinking home sizes.