Just as I was going to write about the outlook for 2013,with an expected cooling measures,an unexpected thing happen on Jan11th. It’s a bombshell for the PRs(Permanent Residents) mainly. For their 1st property they now have to pay an additional 5% buyers stamp duty(ABSD).
This hardly puts a dampener on new projects as there are projects that “absorb” the additional buyers stamp duty. They did that for the last cooling measure that affected the foreigners. Hardly caused a dent then..hardly will cause a dent now. But HDB flats owners will have a hard time trying to get a high COV(Cash-over-Valuation) they would have enjoyed just a few months ago. The PR buyers may now use this excuse to fight for a lower COV. The argument that they will go back to rental rather then buying is nothing short but a lack of prudence. Rentals are money down the drain unless they have no intention of settling, something I see predominantly with Indian PRs. The other nationalities all seem wanting to stay put. Which is why ICA(Immigration and Customs) hesitate to give PRs freely to Indians,I suspect. But I digress..
Good news for Singaporean first timers. Not only now they have a choice BTOs(Built-to-Order) being churned out, they now can take a whiff of resale market,with the likelihood of lowering COVs. But again, it’s a matter of supply and demand, and location, that determines the COV. Valuation of houses is still on the rise,which gave the increase in the growth of resale flats for the last 2 quarters. This was inspite of negative growth in the same quarters.
So for 2013, market will seemingly be buoyant, basically for upgraders,and newly minted couples who cant wait for a BTO. In the private property front, the main objective of these cooling measures is to discourage multi-property ownership for investment purposes and mainly targeting at second-timers. Singaporeans purchasing a second residential property will be subjected to the hefty 7% Additional Buyers’ Stamp Duty (ABSD), a higher minimum cash down payment of 25% and a Loan-to-Value (LTV) limit to 50% for a second housing loan, this will have a drastically reduce the buyers who will be sidelined by the policies.
Hence a good buy to look out for, will be the Executive condominiums, that will be slated to increase in numbers, and with new guidelines about the size of the flats, will be a boon for many young couples and HDB upgraders. This is what i said in my TV interview months back about what is the best thing to buy.