Two new rules have been rolled out in an attempt to curb speculation in the private property market and stabilize prices.
- Lending institutions can lend only up to 80% of the value of the property
- Stamp duty of 3% will be levied on those who sell the property within a year of buying it
Despite the move, it’s believed that it’ll provide only a temporary respite as buyers pause and take stock.
Some analysts believe that most buyers were not planning on taking the maximum 90% loan anyway. Banks are less willing to take risks due to the recent economic crisis and charge higher interests to those who wanted to take the full 90% loan. As such, buyers have been prepared to borrow less.
Mid to long-term speculators who expected a holding period of two or more years will not be deterred as well.
The ones who are expected to be most affected by the new laws are the ‘upgraders’ – those who are moving up from HDB flats to condominiums. They’re typically the ones who borrow the maximum 90%.
The new laws do not affect the HDB resale market.