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Dec. 15 (Reuters) – Singapore on Wednesday announced a package of measures to cool its real estate market, including an increase in stamp duties and tighter loan limits.
The resale markets for private residential and public housing have been vibrant, despite the economic impact of COVID-19, the government said in a statement. Private housing prices have increased by around 9% since the first quarter of 2020, while fixed resale prices for public housing have increased by around 15%.
Authorities in Singapore, where real estate is a safe haven for wealthy foreigners, are closely monitoring real estate prices to ensure housing remains affordable for residents and keeps pace with economic fundamentals.
“If nothing is done, prices could exceed economic fundamentals and increase the risk of a destabilizing correction thereafter,” said the joint statement from the Ministry of Finance, the Ministry of National Development and the central bank.
“Borrowers would also be vulnerable to a possible rise in interest rates in the years to come.”
The measures will take effect on December 16.
Among the measures, the government will increase the Additional Buyer Stamp Duty (ABSD) for foreigners to 30% from the current 20%.
It will also increase the rate for citizens buying their second home to 17% from 12%, while for third and subsequent residences the rate will drop from 15% to 25%.
The ABSD for permanent residents purchasing a second home will drop from 15% to 25%, while for third and subsequent homes it will drop from 15% to 30%. Entities will have to pay 10 percentage points more at 35%.
Singapore last increased its ABSD rates in 2018.
The government will also tighten the threshold for the total debt service ratio to 55% from 60%, and increase the supply of public and private housing, he said.
Reporting by John Geddie, Chen Lin and Aradhana Aravindan; Editing by William Maclean, Marguerita Choy, KIrsten Donovan
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