Real Estate

In the last two years, property transactions are close to its record peak and market analysts have nothing but nice commentary about real estate market in the coming months.As the local economy works to shrug off the scars of the recent financial meltdown and the H1N1 Influenza, Singapore property market has been the darling of the moment. But in the middle of all these optimism, Singapore government has raised the alert in November 2009 that it is worried about a repeat of the 1996 boom buzz cycle.

Now more knowledgeable and more alert, government is not about to get caught again in another similar situation. Older Singaporeans would no doubt remember the mid nineties property craze, perhaps more so for people who got burned by it subsequent and sharp retraction.

Apart from its market-oriented philosophy that affects Singapore property sector with relatively few laws, some of which provide land, credit control and tax policy. Let’s try to understand each of them and to examine the possible consequences.

Land supply strategy – it was always a good effect used on the governments to provide more than a super bullish fervor containing developer. How can a government report would be less land for housing and industrial development, provision for new residential and commercial buildings delaying projects and thus reduce speculative play on the new market.

Credit – It is feared that this amount may, in the 80-percent level or lower level of 75% placed.There was a report circulating in the area of real estate that the government is considering a review of the lending guidelines for housing loans. More effective control is tightening the money supply.Current law authorizes up to 90 percent of the purchase price to be paid to qualified buyers.

Capital Gain Tax – This can be one of the more drastic measures. It was first introduced in mid nineties to curb over speculation but was subsequently abolished. Government may consider enforcing laws to compel buyer who buys properties in this period to hold on for one year before releasing back to the market in order to be exempted from tax. It has been a powerful tool during the mid nineties to counter excessive speculation in Singapore market. If this is to be re-enforced, surely a lot of players would be hit hard.

Property Tax – Has a selective implementation of the land. For example, buyers who could not satisfy the minimum length of stay in the above statement be subject to the tax higher than the current 10 percent. For owner-occupants, usually less than half that amount.

Two Way Stamp Duty – To pay two-way stamp duty is the buyer and seller stamp duty. Currently, only the buyer has to pay the stamp duty.

The top looks to use some of the possibilities of government can, in order to cool the overheated market. If you are active in real estate speculation, make sure to keep knowing developments.

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