Singapore - Member of Parliament Christopher de Souza reiterated his call for the government to take a gradual approach in easing property cooling measures.
Speaking in Parliament on the second day of the Budget debate on Tuesday, he said that a review of the measures is needed, as the property market is now lacklustre.
"As such, would the government consider the gradual and calibrated approach of removing ABSD (additional buyer's stamp duty) for Singaporean buyers, while still retaining the TDSR (Total Debt Servicing Ratio) for Singaporeans and the ABSDs for foreigners?" he asked.
The government introduced the two measures previously in a bid to stabilise the property market.
The ABSD, first introduced in 2011, requires buyers to pay an additional stamp duty equal to a certain percentage of the property value.
The TDSR, on the other hand, limits the amount that financial institutions can lend to a potential buyer based on his monthly income. It was introduced in 2013 and is aimed at curbing speculation.
The measures have weakened private industrial and residential building activity, causing growth in the construction sector to moderate to 2.5 per cent last year, from 3.5 per cent in 2014.
This led the Ministry of Trade and Industry to flag that poor private-sector construction demand, among other factors, would probably retard the economy in 2016.
Yet, the Monetary Authority of Singapore seems quite certain that any impact of a property slowdown on the economy will be contained.
Finance Minister Heng Swee Keat had stated in his March 24 Budget speech that "based on the price level and current market conditions, our assessment is that it is premature to relax these measures." In his speech on Tuesday, Mr de Souza noted the slowdown, and also his understanding that any lifting of the measures should be done gradually.
Thus, he is advocating to keep the TDSR so as to ensure that any potential buyer can only afford what is within his means.
"This should allay any concerns that easing the property cooling measures will cause a surge in Singaporeans purchasing second properties when they may not be able to," said Mr de Souza.
But the ABSD should be removed for Singaporeans, as having it in place would dampen property-buying aspirations, he explained.
The ABSD should still remain for foreigners so as to curb speculation in the local market.
He also called on the government to study the Australian approach to cooling the market. This approach allows all foreign buyers to buy only new property, and they are able to sell that property only to domestic buyers.
This article was first published on April 6, 2016.
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