ST : New property rules: 'No effect on genuine buyers'

Feb 21, 2010

New property rules: 'No effect on genuine buyers'

Govt considered other factors besides prices in acting to prevent bubble, says Grace Fu

By Jamie Ee Wen Wei

Buyers with the financial means to hold a property will not be affected by the two new measures that came into effect yesterday, Senior Minister of State for National Development Grace Fu said.

She emphasised that the Government had acted to prevent a speculative bubble from forming.

In closely monitoring the property situation, it did not just look at prices, she said yesterday.

It also took into account a comprehensive range of indicators, including the volume of sub-sales and the 'churn' - also known as 'flipping' - in the market.

Ms Fu's comments - made at the sidelines of a community event - came a day after the new measures were announced.

From yesterday, any property sold within a year of its purchase will attract stamp duty of around 3 per cent. This is on top of the stamp duty the prospective seller had earlier paid on the purchase.

Home buyers will also have to fork out more of their own money to buy property. Lending institutions will now be allowed to lend only up to 80 per cent of the value of the property, instead of 90 per cent.

Ms Fu said rising property prices were not the only reason that the Government decided to step in.

'We don't really comment on property prices. But we look at a whole host of indicators...So it's not just about pricing,' she said.

Asked why the new rules had come hard on the heels of last September's market-cooling measures, Ms Fu said the Government had been monitoring the market very closely and felt 'it was the right thing to do for the moment'.

'We would like to, in a way, make sure that there's no bubble formation and can do it before the bubble is being formed. We think it's a suitable time,' she said.

Emphasising that the aim was to deter speculative behaviour, she said: 'We want our investors to be on a more solid ground when they invest in property.

'It should not deter genuine buyers who have the financial resources to hold a property. So, to an extent, we think it'll help maintain a healthy state of the market.'

Last September, the Government removed the interest absorption scheme and interest-only housing loans - both of which removed or reduced regular instalment payments for uncompleted properties. It had also announced the resumption of confirmed-list land sales in the first half of this year.

Asked if any financing restrictions on Housing Board loans were in the pipeline, Ms Fu said there were already stringent credit checks to curb speculation in public housing.

'Plus the fact that HDB buyers who come to us for first-time loans, they are likely to live in the house that they buy,' she said.

She added that the new rules were not meant to curb the rising cash-over-valuation (COV) sums.

'COV happens when someone is prepared to pay a price above the valuation, so as long as a person has the means, then he will be willing to pay for the flat if he thinks it's worth it.'

Meanwhile, home buyers yesterday continued to throng showflats across the island despite the new measures that had kicked in.

Those whom The Sunday Times spoke to said the new rules will not affect them.

Sales manager William Shie, who is in his 40s, welcomed the new rules.

Mr Shie, who was at the 408-unit The Shore Residences showflat in Katong, said: 'It won't affect people like me who need a house. I actually welcome the new ruling. The lower the maximum possible loan, the better, because it chases away speculators.'

jamieee@sph.com.sg

Additional reporting by Sumita Sreedharan, Debby Kwong and Ng Hui Ying