Monday, August 30, 2010

The latest government measures may just work

Updated 31 Aug 2010: Added additional rules

I've just been ranting here about how the URA's plan to release more land will not work in taming the prices. However, the government measures announced during National Day Rally 2010 seems like it will do the trick. Trying to make the developers reduce price is next to impossible. So instead, work on the buyers.

The measures that will kick in on 30 August 2010 should work in taming the prices in my opinion because it reduces speculation by:
  1. increasing the amount of downpayment to 10%
  2. extending the imposition of seller's stamp duty to 3 years
  3. decreasing the loan to value ratio to 70% if you have an outstanding loan
  4. standardising the minimum occupation period (MOP) of HDB flats to 5 years
  5. disallowing concurrent ownership of both HDB flat and private property during MOP
  6. mandating that the private property should be disposed within 6 months from date of purchase of a HDB flat.

All the above points are regardless whether the HDB flat is subsidised or not.

Target the speculators, and the market price should reflect the real demand, I hope. However, I still think that they should scrape the DBSS and just concentrate on EC.


Anonymous said...

10% downpayment is nothing if you ask me. If the rich foreigners are coming 10% will not deter them. In countries like china, minimum downpayment is 30% to 40%. Singapore property prices is still cheap compared to shanghai and hong kong if you factor in the easy access to credit.

Anonymous said...

One analyst said we are flushed with liquidity - which i believe is quite true considering our buoyant economy. Sooner or later, people get round these measures if not, take their money somewhere else where they are most welcome.

Meanwhile, it appears our government is using the supply side to taper home prices, besides deterring speculators.

I hope they realized that many baby boomers are forced to rely on their "assets" to finance their winter years or keep up with escalating costs of living here?

As our beloved government worship our youthful aspirants and dreamers by promising new homes at affordable prices, many more old birds are ready to give up their nests in the next 10 to 30 years.

Will this continuation to milk more money out of these new home seekers cause a glut in the resale market and eventually drag home prices and economy down?

The possibility is high, if badly managed.

Meanwhile, maybe more of our oldies will turn to government bodies for hang out, in which they will be told to find work, because the demand for their homes will fall?

Melbourne said...

Look at the bigger picture.

What this equivocally shows is that the Singapore property market is far from a free market.

The beauty of capitalism is that it is self-regulating.

Ask yourselves why the government "had to step in". Why the banks did not independently lower loan ratios.

Adam Smith's invisible hand cannot be denied forever. Think of the bigger implications.

In such an environment, when the correction eventually comes, its impact will be much harder.

Anonymous said...

We all know that the government is ultra capitalist and hence, its regulatory methods are all geared towards maximizing certain interest groups with the least economic casualties.

They have come out strong by saying, the money is with the young and therefore, let's build more new flats for them and let the old struggle with their "asset".

Anonymous said...

And one day, new flats will become resale too and all will struggle to get rid of it.LOL.

Anonymous said...

They should make new homes much more expensive than resale homes without rocking the current prices perhaps more will be happier that way.

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