Singapore Decoupling Guide
TLDR Decoupling in Singapore's real estate refers to the process of separating property ownership to avoid Additional Buyer's Stamp Duty...
Read More
TLDR
The Singaporean real estate market has remained stable due to government cooling measures. These include Additional Buyer’s Stamp Duty (ABSD) and Seller’s Stamp Duty (SSD) to regulate demand and curb speculation. Measures like Total Debt Servicing Ratio (TDSR) and Loan-to-Value (LTV) ratios protect buyers from overstretching financially. Public housing through HDB and CPF schemes ensures high home ownership rates and steady prices. These steps maintain market stability, safeguard the economy, and offer opportunities for strategic property investments tailored to individual needs.
Singapore’s real estate market is known for its consistent stability and comparatively lower fluctuations compared to other major cities like Hong Kong, New York, Sydney, and London.
Cooling measures have been instrumental in Singapore’s efforts to prevent volatile boom and bust cycles in its property market. These measures have also been observed in other markets.
The implementation of cooling measures has had a major influence on stabilizing Singapore’s property market. It all began in 2009, when the first cooling measure was implemented, laying the groundwork for further measures and policies that would be adopted in the decade ahead. Examining the pre and post-cooling measure fluctuations of the Singaporean property market, it is clear the measures had an immense effect. For example, the highest price point reached in 2013 was a whopping 71.6% greater than the 2008 bottom of $750 per square foot – that’s a larger gap than the 14.7% between the 2014 and 2019 highs.
The history of cooling measures in Singapore
BSD and ABSD moderates price growth
Singapore’s residential property market has been subject to government measures meant to cool the market, including raising the ABSD rate for foreign buyers to a remarkable 60%. Singaporeans and Permanent Residents (PRs) buying their first home are exempt from paying the ABSD, however, Singaporeans and PRs buying their second or subsequent properties are required to pay a 5% ABSD. This tax, along with the BSD, serves to add to the total cost of purchasing a residential property and help to regulate demand.
The advent of SSDs has put the brakes on speculation.
In 2010, the Seller’s Stamp Duty (SSD) was introduced to curb rampant speculation-driven buying and selling of condos. In 2007, the sub-sale volume reached an all-time peak of 4,854 units; however, it dropped to 3,317 units by 2010 and has consistently remained below 3,000 units ever since. In 2022, only 695 condo units were sold through sub-sales. Evidently, the government is taking firm action against speculation as these transactions tend to cause artificial price hikes which can lead to unsustainable price bubbles.
The TDSR and LTV ratio promote smart financial management
The government has implemented a range of measures, such as adjusting TDSR and LTV, in order to protect homebuyers from taking on too much debt. The latest move came in September 2022 when the medium-term interest rate used to calculate TDSR for loan eligibility from financial institutions was raised from 3.5% to 4%. Prior to this, in December 2021, TDSR was reduced from 60% to 55%, both measures providing a ceiling on housing budgets and helping to prevent buyers from becoming overstretched.
“HDB and CPF: Bringing Home Ownership Within Reach for Singaporeans”
Singapore’s home ownership rate of 89.3% is one of the highest in the world, largely due to the success of our public housing program. Thanks to the Central Provident Fund (CPF) being utilised for down payments and mortgage payments, home ownership in Singapore is much more affordable than in cities like Sydney and Hong Kong (62.1% and 51.2% respectively). HDB and the use of CPF have helped to cushion the volatility in the private property market, as 74% of Singaporeans now live in and own their own HDB flat. HDB also maintains control over the supply of new flats and prices of BTO flats, while the government has implemented various cooling measures and regulations related to HDB eligibility.
The cost of HDB flats remains consistent over time
The implementation of cooling measures and HDB’s tight control over the availability and prices of BTO flats have resulted in steady resale prices of HDB flats over the past two decades. After peaking at $469 psf in 2013, the resale prices declined to $441 psf in 2014 and stayed steady until 2021 when there was a 13.2% year-on-year increase in the average price, reaching the milestone of $500 psf and now standing at $557 psf – all due to delayed construction and scarce supply of new flats.
How can less volatility be beneficial?
The housing sector in Singapore is undeniably important to the country’s economy, as evidenced by the high home ownership rate. With housing often serving as a store of wealth for individuals, extreme fluctuations in prices can have catastrophic effects – the 2007 US subprime financial crisis being a prime example. This is why Singapore takes extra care to ensure a balanced housing market, thus protecting the economy from any further potential harm and contributing to sustained growth. It is evident that Singapore values the housing sector and all of its related industries, and takes the necessary steps to ensure a stable and secure economy.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Singapore’s HDB Projects: From Unique Landmarks to Just Another Brick in the Wall?
Take a look at this chill spot in Yew Tee. Someone's gone all out to make it feel like an...
Read More
Top 5 Historical Landmarks in Singapore
Singapore, a bustling cosmopolitan city-state, is known for its rich history and diverse cultural heritage. This small yet vibrant nation...
Read More
Why Can’t We Buy Low, Sell High?
Madam Tan voiced that approximately two years ago, when her apartment hit its minimum occupation period, she and her spouse...
Read More
Sell High Buy High : Will This Still Make You a Profit?
TL;DR Summary: Timing of Property Sale: Selling high and buying high may seem counterintuitive, but understanding market dynamics can...
Read More
The Advantages and Disadvantages of Purchasing an Auction Property in Singapore
TLDR When considering purchasing a property through auction in Singapore, remember that you can potentially get a great deal below...
Read More
Are You Ready to Take on the Singapore Property Market in 2023? 12 Reasons to Be Hopeful (Or Wary)!
2022 sure was a rollercoaster ride for the property market, and the world! From war in Europe to skyrocketing interest...
Read More
Dual-Key Condo: Analysing The Pros And Cons
TLDR for "Dual-Key Condo: Analysing The Pros And Cons" When considering dual-key condo units, it's important to weigh the advantages...
Read More
Top 5 Vegetarian Restaurants in Singapore
Singapore, a melting pot of cultures and cuisines, offers a diverse range of dining options for food enthusiasts. For vegetarians,...
Read More
3 Things You Need to Know if You Are Buying a Second Property
TLDR When considering buying a second property in Singapore, ensure eligibility by meeting the Minimum Occupancy Period (MOP) and understanding...
Read More
Why Can’t Everyone Have Homes In Good Locations?
TLDR In a nutshell, the Singapore property market is undergoing significant changes, with the introduction of a new housing classification...
Read More
When a Property Seller Pulls Out of the Deal : What Now?
TLDR When a property deal is not yet formalized, sellers can withdraw without consequences. However, once an Option to Purchase...
Read More
The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets
The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets Some homeowners may find themselves regretting certain...
Read More
How Can Real Estate Investment Help You to Combat Inflation?
TLDR When it comes to real estate investments in Singapore amidst rising inflation rates, consider strategies such as capitalizing on...
Read More
5 Reasons Why It’s A Great Time To Buy Property In Singapore In 2024
Singapore's property market is known for its stability, high demand and strong returns. With a growing population, low unemployment rates,...
Read More
Singapore Private Residential Market Outlook 2023
TLDR The Singapore residential property market has shown resilience in 2022, with price growth in both private housing and HDB...
Read More
The Quick Guide For Buying Landed Property In Singapore
TLDR When it comes to purchasing a landed property in Singapore, there are three main types to consider: terrace houses,...
Read More
6 Essential Factors HDB Upgraders Should Be Aware Of Before Purchasing a Condo in 2023
TLDR When upgrading your property, consider factors like rental rates, Buyer's Stamp Duty adjustments, higher interest rates for bank loans,...
Read More
Want To Buy A Property? Read Me First!
TLDR Understanding the key factors involved in buying property in Singapore is crucial for making informed decisions. Consider your investment...
Read More
Bayshore: Reinventing the Experience of Living by the Beach
TLDR When deciding on buying or selling property in Bayshore, consider the recent developments and potential future growth. With a...
Read More
