Singapore’s Ministry of National Development, replying to a parliamentary question, stated that it has been monitoring the property market closely and has decided to take various measures to pre-empt signs of a speculative increase in prices.
The Ministry said that demand in the internal property market has rebounded very strongly since early 2009, and prices for some housing projects are also increasing in tandem with the strong demand. Overall private housing prices, it said, have started to increase significantly since June this year.
The current low interest rate environment has drawn more buyers into the property market, reducing the cost of property financing and encouraging a steady rise in the volume of bank lending for housing loans. The Ministry was of the opinion that, if unchecked, this trend could lead to a rising spiral of demand and prices and, therefore, the government has decided to adopt several measures to restrict the formation of any such trend.
In addition to reinstating the confirmed and reserve lists of official land sales to ensure a steadier supply of private housing and outlawing interest-only or reduced repayment loans, the government has rescinded a number of assistance measures, which had been announced in the 2009 Budget earlier this year.
The Ministry said that, as these assistance measures are no longer needed, they will not be extended when they expire. The measures were the allowing of a one-year extension of project completion periods; permitting the re-assignment of government land sale sites and private land owned by foreign developers; giving developers up to four years to dispose of all private residential units in the development; allowing developers to rent out unsold private residential units for a maximum of four years; and allowing up to two years of property tax deferral for land under development. The first four measures will expire on January 21, 2010, and the last measure on January 21, 2011.
A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report15.asp
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