NATIONAL Development Minister Khaw Boon Wan yesterday turned down an MP's call to relax some of the property cooling measures, saying such a move could raise demand and, in turn, housing prices.
Ms Foo Mee Har (West Coast GRC) wanted the Government to consider easing some rules like the Additional Buyer's Stamp Duty (ABSD) so that Singaporeans can upgrade their properties while staying financially prudent.
But Mr Khaw believes it is too early to loosen the rules.
"Such a move could lead to an upswing in demand, which would increase the number of transactions and raise housing prices," he told Parliament as he restated the Government's position.
"This would not be welcome to Singaporean home buyers, particularly those with aspirations to upgrade."
Singaporeans who buy a second property, without selling their first home, have to pay 7 per cent ABSD on their new purchase and 10 per cent on subsequent ones.
Foreigners pay 15 per cent ABSD on any residential purchase, while permanent residents pay 5 per cent on the first property and 10 per cent on subsequent ones.
But home prices have yet to budge significantly.
As a result, the Government stated twice in the last two months that the cooling measures will stay: the National Development Ministry at the end of June, and the Monetary Authority of Singapore's managing director Ravi Menon last month.
Mr Menon said prices remain high, having risen 60 per cent in the last four years and fallen by just 3.3 per cent in the last three quarters.
Latest figures show that in the second quarter of this year, private property prices fell 1 per cent while public housing resale prices fell 1.4 per cent.
In his reply, Mr Khaw also said the cooling measures are to keep the housing market stable and sustainable.
"They aim to encourage financial prudence among home buyers and to moderate property prices."
The measures include lowering the proportion of income that can be used to pay a home loan. He also said there are concessions to benefit upgraders. For example, Singaporean married couples can get an ABSD refund if they sell their existing home within a stipulated period after buying their second home.
Similarly, an upgrader, who provides documents to his bank to show he will be selling his existing home, will be treated as a borrower with no outstanding home loans. This lets him qualify for the maximum loan-to-value ratio of 80 per cent. In other words, his new loan can cover 80 per cent of the value of the purchase.
"The existing concessions are reasonable and sufficient," concluded Mr Khaw.
"Any move to relax the cooling measures, including by broadening these concessions, is premature under current market conditions."
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