Property cooling measures safeguard ‘well-being of Singaporeans’ amid economic crisis: Desmond Lee

Property cooling measures safeguard ‘well-being of Singaporeans’ amid economic crisis: Desmond Lee

Amid the economic crisis, property cooling measures are all the more necessary for the “well-being” of Singaporeans, by encouraging prudence and caution in their property purchases, National Development Minister Desmond Lee said on Wednesday (Sept 16).

He made the comment in response to questions from PropNex chief executive Ismail Gafoor during a dialogue session at the PropNex Mid Year 2020 Convention, about whether the Government would consider easing some of these measures given the grim outlook for the property market.

Mr Ismail noted that since the latest round of cooling measures was introduced in July 2018, speculative activity in the local property market has been practically eradicated.

And while the market has held steady since the Covid-19 pandemic began, he said this had largely been due to pent-up demand, and that the longer-term outlook was gloomier.

Latest data on the property market showed that sales of private homes soared for the fourth consecutive month in August, to reach their highest level since last September.

Also last month, five HDB resale flats were sold for at least S$1 million, and the average price of resale HDB flats across Singapore rose 2.1 per cent from the same month a year ago.

But looking ahead to what will likely be a subdued property market, Mr Ismail asked whether the Government would review the Additional Buyer’s Stamp Duty (ABSD), which has to be paid by homeowners who purchase their second and subsequent properties.

For Singaporeans, the ABSD stands at 12 per cent of the property price, while for foreigners it is 20 per cent.

He suggested, for example, tweaking the stamp duty for properties in the core central region.

“Because it is a relatively hefty 20 per cent ABSD on foreigners and the inflow is being very much reduced in the current situation, and moving forward it might (continue to) be the case because of the global outlook,” he said.

Mr Ismail also suggested loosening the rule that while married Singaporean couples buying a second home have to pay ABSD for their second homes, they can get a remission if they sell their first property in a year.

Upgraders often have to wait several years for their second homes to be completed, he noted.

“Many of them are hurriedly selling their HDB flats so that they can avoid paying the 12 per cent (stamp duty) for their dream home. In this process, they go through some challenges because when they sell their HDB, they’re going to rent or shift to their parents’, until they receive the Temporary Occupation Permit (for the second home),” said Mr Ismail.

He added that Singaporeans who can afford to buy a second property should be supported to do so within the local market, so that they do not invest overseas just to avoid the ABSD.

“(They might) end up risking their retirement funds because foreign policies are very different, the currency policies are very different and some consumers might not have a good understanding (of these),” he said.

But Mr Lee, who took on the national development porfolio after the July General Election, said that given the crisis, it is important for Singaporeans to be cautious about financial investments.

“At this point in time, we also want to be, collectively as Singaporeans, very prudent and careful, especially when you enter into commitments that are very long term,” he said. “A home is a big ticket item and it’s for the well-being of Singaporeans that some of the measures are there.”

Still, Mr Lee said that “no measure is perpetual”, adding that the Ministry of National Development will continue to review and calibrate the property rules as needed.

“We recognise that at some stages, (the measures) can cause some pain and friction to genuine homebuyers,” he said.

“We’ll continue to study those measures to see how we can enable those who are aspiring and have prepared well for the upgrade, to be able to do so while ensuring that we reduce the risk of speculation and runaway prices that will hurt everyone.”

Source: Today – 16 Sep 2020

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