Are property prices set to rise?

(Disclaimer: The writer is NOT a property agent, nor does he have interests in any of the properties mentioned)

The most exciting news of the morning would have to be that of the Seller’s Stamp Duty easing.

This is how it has been changed:

  • 1st year of sale – 12% (down from 16%)
  • 2nd year of sale – 8% (down from 12%)
  • 3rd year of sale – 4% (down from 8%)
  • 4th year onwards – 0% (down from 4%)

To give an idea of how much the scale is, let’s say if you just bought a property at $1m and want to sell it off on the first year, that’s a whopping $160k ang pow you’ll be giving the government (under the old rules).

Put simply, the administrators don’t want you to “flip” properties.

But now that the SSDs have been reduced, there is opportunity to buy and sell quickly, if you know where to look.

Take for example Parc Riviera, a new project in Jurong. The condo will finish construction and acquire a Temporary Occupation Permit (TOP) only in the year 2020. If you exercise your option to buy it today, you’ll be able to sell it off even before the building is completed. By then, those who want a brand new apartment but don’t want to wait years for construction can just buy it off the shelf from you – at a higher price of course.

For those who just bought these new properties – it’s like striking lottery.

Some people might say “..but there is still the TDSR (Total Debt Servicing Ratio), nobody wants to buy from you!”

One must understand that the property market in Singapore is hardly dead. There is very strong upward pressure still, but for the restraining measures to curb buy/sell activities, prices would have rocketed steeply. There is still very strong demand for property, both from Singaporeans and from foreigners. It would be too far fetched to assume no one wants to buy.

At Parc Rivera last week, it was so packed there was no place to sit. Agents had to sign deals within the showflat itself!

The easing of the SSD also increases the texture of supply.

Today, the only types of property one could buy are either those that are under construction, or have been on the market and lived in for 4 to 5 years or more. Now you’ll get to buy those between 0-3 years, a new range of market has just opened up.

There is so much potential for growth in Singapore, what we need now is money to fertilise it. There are entire regions of vegetation in the West, North and East that is earmarked to be developed into business districts. It would solve the problem of having commuters having to travel down to the CBD every single day, thus easing congestion. There are new airports in Seletar, international railways in Jurong and so many MRT stations you’ll need to re-learn how to use the train system.

 

 

This time around, the prices will not be allowed to rocket in a short time span. We’ve seen this between 2004-2009: the property boom that minted so many Singaporean millionaires. Today, I believe that the market will be kept buoyant and even allowed some controlled rising on a gentle slope.

Before we end off, here’s some quick thoughts on HDB properties. These are the properties that will not be affected by the news. Whether DBSS, ECs, BTOs or resales, you are obliged to stay in it for at least 5 years (the minimum occupancy period). It looks as if the government deliberately wants the HDB properties to be strictly for living only and perhaps to preserve income over the rate of inflation – but no more.

The more people that the Government can move into private properties, the better – for then people would not be hogging HDB assets for those who really need them. Considering these, you won’t be enriched through the purchase of HDB houses.

The private property market looks set to rise. The question is, are you ready for it?

About the author

Tay Leong Tan

Tay Leong Tan is a collective of 3 writers. Tay, Leong and Tan. (Who were you expecting?!) We are enthusiastic about labour issues, economics and current affairs in particular.

View all posts

Share your thoughts!