http://propertysoul.com/2013/01/14/w...ling-measures/
Who are affected by the new property cooling measures?
January 14, 2013
The objective of the comprehensive package of property cooling measures, according to the government, is “to ensure a stable and sustainable property market”.
Government intervention can definitely delay the onset of a bubble burst, making the market ‘sustainable’ for the time being.
As for 'stable’, I don’t think this is what investors/speculators or real users want. The former wish prices will continue to go up while the latter want the other way round.
You may say it is just another government attempt to stem out speculation in the property market. But this time round, it may affect more people than just the target group.
This is similar to the scenario of carrying out a fogging exercise in the neighborhood for the purpose of pest control. It kills not only mosquitoes and flies, but also lizards, butterflies and other insects that have done no harm but have to sacrifice for a bigger cause.
With the new restrictions kick in, who are likely to be the unfortunate living things in the property ecosystem?
1) Developers, property agents and mortgage banks
Buyers are going to wait on the sidelines at least for the next few months. Fortunately, first quarter is usually a slow quarter that everyone expect disappointing results anyway. Blame it on the New Year and Chinese New Year!
2) Permanent Residents (PRs)
This is definitely bad news for PRs, especially for long-term staying PRs who have no intention to convert to Singaporeans or don’t seem to get approved for their Singapore citizenship. From now on, whatever they are going to buy, they are going to pay more than Singaporeans.
3) Public housing tenants
PRs are no longer allowed to sublet the whole HDB flat. In the forseeable future, less supply of HDBs for rent may result in higher rental rate for the tenants.
4) Public housing owners
Thanks to the lower cap on Mortgage Servicing Ratio at 30 to 35 percent of the borrower’s gross monthly income. Less people can afford the higher-priced HDB units. Large-size and relatively new HDB, BTO and EC units at rarely-found good locations now have a smaller pool of buyers.
5) The upgraders
Those who can afford the current skyrocketing prices would have already bought their home. The Additional Buyer’s Stamp Duty (ABSD), lower LTV and higher minimum down payment only make the target properties of the upgraders more unreachable.
6) Those who bought in the last three years
Cooling measures that kick in over the last three years mean higher transaction costs (ABSD, seller’s stamp duty) and reduced monthly return. Even if they can sell in the near future, with only a slight increase in property prices, the chance of them having a profit is slim. That’s why they can’t sell now and are stuck with an overpriced property.
Well, no matter what is going to happen in the property market, at least one party can benefit from the new round of cooling measures.
Here’s to the government. May you enjoy another prosperous year collecting more buyer’s and seller’s stamp duties!