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Editorial
Published September 3, 2010
Cooling the property market, flexibly
THE Singapore government has acted swiftly and decisively in introducing new and tougher rules to dampen property speculation - the third time in a year that the authorities have moved to cool an overheating market.
Among the many changes announced earlier this week are a requirement for HDB resale flat buyers to sell off any existing private property they own - including property overseas - within six months of the flat purchase. Also, those who want to buy a second home while still paying for an existing mortgage must pay more upfront.
Many Singaporeans, especially those looking to buy their first HDB flat, cheered the new regulations. But with the economy now expected to slow down in the second half of this year after stellar growth in the first six months, a calibrated approach is required to ensure that the moves will help stabilise the private property market and prevent a bubble from forming. The priorities must be to weed out property speculators and provide as many deserving people as possible the opportunity to own an affordable home.
As with any blanket ruling, there will be some who will become victims of unintended consequences. For instance, permanent residents (PRs) who are looking to buy a resale flat will now have to sell their private property in their home countries.
How the government will enforce this effectively and impose the relevant penalties on offenders remains unclear, for it would be easy for someone to simply transfer deeds to family members who are not Singapore citizens or PRs. Another possible 'loophole' would be for the PR to buy the resale flat by proxy.
The new rules could also affect private property sellers, in particular those who sell within three years of the purchase as they must now fork out stamp duty of up to 3 per cent of the sale price. Previously, the seller's stamp duty applied only to resale within the first year after purchase.
Some would-be sellers might now think twice before putting their properties up for sale. But this would only be the case for sellers at the margin. So worries in some quarters that the ruling would contribute to a shortfall in private property supply and in the process induce an escalation in prices and defeat the very purpose of the new measures are largely unfounded.
While it's important to introduce measures to curb speculation and prevent a property bubble, there is also need for some flexibility to ensure that genuine home buyers - such as those who wish to purchase a second home for their elderly parents - are not denied the option to do so.
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Originally Posted by gn108
