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SINGAPORE PROPERTY WEEKLY Issue 297
So you want to buy another property, drawn Lets look at the four considerations any
in by what look like attractive prices. Why buyer should take note of before buying
not? Home values have dropped for more another property.
than 3 years now, posting the longest losing
Consideration #1 Additional Buyers
streak in 17 years. The view going forward
Stamp Duty (ABSD)
doesnt look like prices are going to rebound.
Also, cooling measures seem to be here to First announced in 2011 and revised on 12
stay. Jan 2013, the ABSD was introduced to slow
the growth of the property market. It is a tax
You should tread carefully. You may be
payable on top of the normal Buyers Stamp
familiar with the rules of the cooling
Duty when you purchase or acquire a
measures, but may not truly understand how
residential property, i.e. it is applicable to both
far reaching they are. You may face obstacles
HDB flats and Private Properties. This has
in getting a loan approved or lack adequate
significantly increased the initial capital
collateral backing. The worst case scenario is
outlay when you are purchasing your 2nd
to be caught in a situation where you have
and subsequent properties. One important
the financial means but still face with
point to note that if a Singaporean purchases
problems buying another property as you
the property with a PR or foreigner, the higher
have difficulty getting a loan.
rate will apply.
Consideration #2 LTV (Loan To Value) The same rules will be applied to refinancing
residential properties. Non-individual
The LTV is the housing loan quantum a bank
borrowers will now have a cap of 40% LTV.
or financial institution is willing offer as a
percentage of the valuation of the property in We have not taken property valuation into
question. Again, this was not spared from the consideration. With a conservative approach
far reaching impact of the cooling measures adopted by property valuers these days, the
to curb property speculation and prices. cash portion to be paid upfront will also be
significantly increased if the valuation do not
The highlights of the current rules are:
meet the purchase price, adding to the
All residential property loans are now only burden of an already reduced LTV.
allowed a maximum loan tenure of 35
Consideration #3 TDSR (Total Debt
years
Servicing Ratio)
If you take up a loan of more than 30
It is not easy to understand the workings of
years or if it extends past the age of 65,
the TDSR, especially for first time applicants
you can either:
of mortgage loans. However, the objective of
borrow up to 60% of property value if the TDSR is to prevent an individual from
you do not have an existing housing loan being overextended because of a property
borrow up to 40% of property value if you purchase.
have an existing housing loan
Whether the property is for investment fulfil the TDSR assessment of 60% where all
purposes or for owner occupation, it is to commitments will be included.
safeguard you from purchasing a property
The logic of these measures are simple but
that is above your means. Just remember this
the impact to you as a property investor is
magic formula:
greater than the sum of the parts put
Total commitment / Total income <= 60% together.
Non-Landed Residential Resale Property Transactions for the Week of Jan 22 Jan 26