The Singaporean government’s cooling measures have had a major impact: sales of new private homes dropped in 2014 to their lowest level for six years, according to Urban Redevelopment Authority data. Prices have also fallen.
Developers sold only 7,557 units in 2014, just above half the units sold a year earlier. Nearly 22,000 units were sold in 2012 which dropped to about 15,000 units in 2013.
Only 230 units were sold in December, the lowest monthly figure since January, 2009 when developers sold only 108 units.
Experts believe that restrictions on borrowing and measures taken to curb speculation are to be blamed. Housing prices fell by 6% in 2015; however, experts rule out the possibility of further drop in home sales.
As the first quarter of 2015 is likely to remain sluggish, the developers may be forced to price their units competitively.
The government has introduced several restrictive measures on local as well as foreign property buyers to curb speculation in Singapore since 2009. Debt is capped at 60% of a borrower’s income. Real estate taxes have also been increased. The government recently raised the minimum cash down payment for individuals applying for a second housing loan to 25%, from the previous 10%.
The government increased the additional buyer’s stamp duty (ABSD) on private and public housing for foreign real estate investors from 10% to 15% in January, 2013. Foreign buyers pay ABSD, introduced for the first time in December, 2011, in addition to the standard stamp duty rates. These rules are also applicable foreigners on long-term passes (called "permanent residents"), but they pay at a lower rate of 5%. Singapore residents have also been brought under ABSD's ambit, having to pay 7% ABSD when buying their second home.
The government also introduced a Seller’s Stamp Duty on industrial properties for the first time, to discourage speculative activity in the industrial market.