When Should You Consider a Shorter/Longer Home Tenure?
TLDR Understanding the benefits of long-term home loans is crucial for financially conservative individuals in Singapore. Opting for a longer...
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TLDR
Since 2009, Singapore has implemented over 15 rounds of property cooling measures to curb speculation and keep homes affordable. These include tightening loan-to-value (LTV) ratios, raising Additional Buyer’s Stamp Duty (ABSD), introducing the Total Debt Servicing Ratio (TDSR), shortening loan tenures, and imposing higher taxes on foreign buyers and those with multiple properties. Despite these steps, both HDB and private home prices have risen sharply—by about 88% and 106% respectively. The latest measures in August 2024 lowered the LTV for HDB loans to 75%, matching bank loans, and increased housing grants to support buyers. Whether to buy, sell, or wait depends on individual goals and market conditions. The key takeaway: cooling measures may slow price growth, but long-term price appreciation remains resilient in Singapore’s property market.
Since 2009, there have been at least 15 property cooling measures implemented in Singapore.
Throughout the years, the Government has rolled out multiple rounds of property cooling measures to ensure that homes remain affordable and to mitigate speculation in Singapore’s real estate market.
Nevertheless, both HDB flats and private properties have seen significant price increases since 2009. Resale HDB flats have risen approximately 87.9% since that year, while private property prices have surged by 106.1% over the same timeframe.
The most recent set of property cooling measures was announced during Prime Minister Lawrence Wong’s first National Day Rally speech in 2024, where he lowered the Loan-to-Value (LTV) ratio for HDB flats from 80% to 75%, while also increasing the Enhanced CPF Housing Grants (EHG) for homebuyers.
September 2009: Removal of Interest Absorption Scheme (IAS) and Interest-Only Scheme (IOS)
The primary aspects of Singapore’s property cooling measures, set against the backdrop of the Global Financial Crisis, included the elimination of the Interest Absorption Scheme (IAS) and the Interest-Only Scheme (IOS).
The Interest Absorption Scheme (IAS) permitted property purchasers to postpone loan instalments after making an initial downpayment until the completion of their units. Before this completion, only interest payments were required by the bank, which were covered by the developers.
In a similar vein, the Interest-Only Scheme (IOS) is a type of home loan that does not necessitate repayments on the principal amount.
For properties that were not yet completed, the interest-only period was generally provided until the properties received a Temporary Occupation Permit (TOP).
February 2010: Seller’s Stamp Duty Was Introduced; LTV Limits Lowered
A Seller’s Stamp Duty (SSD) was implemented on all residential properties and lands acquired on or after 20 February 2010, and resold within a year of purchase. The rates are as follows:
- 1% on the first $180,000
- 2% on the subsequent $180,000
- 3% on the remaining amount
Additionally, the Loan-to-Value (LTV) limits were reduced from 90% to 80% for all bank home loans, encompassing private residential properties, Executive Condominiums (ECs), HUDC flats, and HDB flats, including DBSS flats.
August 2010: Increase Seller’s Stamp Duty From 1 Year To 3 Years; More Restrictions For Existing Property Owners
The Seller’s Stamp Duty (SSD) will now apply to properties sold within a period of 3 years rather than the previous 1 year.
Additionally, property purchasers with an existing home loan are required to make a minimum cash payment of 10%, up from the previous 5%, and their loan-to-value ratio (LTV) will be reduced from 80% to 70%.
January 2011: Holding Period For SSD Raised to 4 Years; SSD Rates Raised;
The duration for the Seller’s Stamp Duty (SSD) has been extended from 3 years to 4 years. The SSD rates have also been increased to:
- 16% if sold during the first year
- 12% if sold in the second year
- 8% if sold in the third year
- 4% if sold in the fourth year
December 2011: Additional Buyer’s Stamp Duty (ABSD) Introduced
One of the most costly property cooling measures was implemented in December 2011, targeting foreigners and non-individuals with a 10% tax; Singapore Permanent Residents acquiring their second residential property faced a 3% tax; and Singaporeans purchasing their third residential property were also subjected to a 3% tax.
October 2012: Maximum Loan Tenure Capped At 35 Years; Tighter LTV For Loans Exceeding 30 Years
A new maximum limit of 35 years has been established for all residential property loans, applicable to both individuals and non-individuals. For those refinancing, the total of the new loan duration and the years since the initial loan was issued cannot exceed 35 years.
Additionally, the Loan-to-Value (LTV) ratio has been decreased for individuals with a loan term exceeding 30 years or those who would be over 65 years old by the time their loans are repaid:
- For borrowers without an existing property loan: 60% (down from 80% previously)
- For borrowers with current home loans: 40% (down from 60% previously)
- For non-individual borrowers, the LTV ratio has been reduced to 40% (down from 50% previously)
January 2013: ABSD Raised; LTV Limits Tightened
ABSD rates have been increased universally:
- Singaporeans purchasing their second residential property: 7%
- Singaporeans acquiring their third and any further residential property: 10%
- PRs buying their first residential property: 5%
- PRs purchasing their second and subsequent residential properties: 10%
- Foreign buyers acquiring any residential property: 15%
- Non-individual purchasers of any residential property: 15%
Additionally, LTV limits have also been tightened:
- For borrowers obtaining a second housing loan: 50% (down from 60% previously); if the loan tenure exceeds 30 years or if the borrower is over 65, then the LTV will be 30%
- For borrowers taking out a third or subsequent housing loan: 40% (reduced from 60% previously); if the loan tenure exceeds 30 years or if the borrower is over 65, then the LTV will be 20%
- For non-individual borrowers: 20% (decreased from 40% previously)
- Borrowers securing second or subsequent home loans are required to pay at least 25% in cash.
June 2013: Introduction of TDSR Framework
The Total Debt Servicing Ratio (TDSR) accounts for all debts when assessing the amount individuals are eligible to borrow for property purchases. This threshold is established at 60% of their gross monthly income.
March 2017: SSD Reduced to 3 Years Period
Due to a notable decline in property sales within the four-year timeframe, the Government has shortened the SSD period to three years, down from the previous four years. The updated SSD rates are as follows:
- 12% if sold within the first year
- 8% if sold in the second year
- 4% if sold in the third year
July 2018: Raising ABSD; Tightening LTV Ratio
The ABSD rates have been raised as follows:
- Singaporean citizens purchasing their second residential property: 12%
- Singaporean citizens acquiring their third and any further residential properties: 15%
- Permanent residents buying their second and any subsequent residential properties: 15%
- Foreign buyers of any residential property: 20%
- Non-individual entities purchasing residential properties: 25%
- Developers acquiring properties for housing development: an additional 5% ABSD
LTV limits for bank loans have also been tightened:
- Individuals securing their first home loan: 75% (down from 80% previously); 55% if the loan tenure exceeds 30 years or continues past the age of 65
- Individuals obtaining a second home loan: 45% (down from 50% previously); 25% if the loan tenure exceeds 30 years or continues past the age of 65
- Individuals taking out a third and any subsequent home loans: 35%; 15% if the loan tenure surpasses 30 years or extends past the age of 65
- Non-individual borrowers: 15%
December 2021: Yet Higher ABSD; Borrowing Limit Was Tightened
The ABSD rate has been raised once more:
- Singaporeans purchasing their second residential property: 17%
- Singaporeans acquiring their third and any subsequent residential properties: 25%
- Permanent Residents (PRs) buying their second residential property: 25%
- PRs purchasing their third and further residential properties: 30%
- Foreigners buying any residential property: 30%
- Non-individuals acquiring residential property: 30%
Additionally, the TDSR has been tightened from 60% to 55%, and the LTV ratio for HDB loans has been decreased from 90% to 85%.
September 2022: Borrowing Limits Tightened; 15-Month Wait Out Period for Private Property Owners Who Want To Buy HDB Flats; Lower LTV Limit For HDB Flats
A higher interest rate was presumed for evaluating borrowers’ capacity to repay, which was used to calculate the TDSR and MSR:
- For residential properties: 4% per annum.
- For non-residential properties: 5% per annum.
- Additionally, HDB established a minimum interest rate of 3% for determining qualifying loan amounts.
The LTV limit for HDB flats has also been reduced from 85% to 80%.
April 2023: ABSD Revised Upwards Again
The Additional Buyer’s Stamp Duty (ABSD) has been increased once more. Now, foreigners are required to pay a 60% ABSD.
- Singaporean citizens purchasing their second residential property: 20%
- Singaporean citizens acquiring their third and any subsequent residential properties: 30%
- Permanent Residents (PRs) buying their second residential property: 30%
- PRs purchasing their third and further residential properties: 35%
- Foreign buyers of any residential property: 60%
- Non-individual entities acquiring residential property: 65%
August 2024: LTV Limit For HDB Loan Lowered To Be Same As Bank Loan
In the most recent set of property cooling measures, the loan-to-value (LTV) limit for HDB loans has been reduced to 75%, aligning it with the current rates for bank loans.
As noted at the beginning of the article, this adjustment was made alongside an increase in the Enhanced Housing Grant (EHG) to help homebuyers manage their downpayment without overextending their finances.
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.
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