Monday, December 12, 2011

New Property Curbs

The government just announced a new bunch of property curbs.

1) if you are a citizen, your 3rd property gets taxed an additional 3%
2) if you are a PR, your 2nd property gets taxed an additional 3%
3) if you are a foreigner, your 1st property gets taxed an additional 10%

That the local property market will tank is a forgone conclusion. The question is, by how much?

This move is one of the most drastic I've seen and it looks like it is targeting the foreigners the most. Basically it is telling anyone who isn't a citizen or PR not to buy SG property now. Hence the worst affected will be the high end condos.

The medium-end private properties are next worst hit because they also have got no foreigners to sell their property to, plus the upgraders will now stay away.

The losers are those who bought their property recently or a few months ago at the high. Worst off are the ones who bought the new launches, who might see their property only completed in 2013, 2014; by which time their home values would be maybe 30% off. No home to move into while having to watch the property you bought sink in value. Xianz.

This in turn will definitely affect their loan repayments, especially if the value of their properties fall below their loan amounts! Good luck to this bunch of people. As such I think the market will slide till 2015. Don't forget that alot of new launches will complete around then and by then the market will suffer a glut of properties available too.

The winners (or potential winners) are the ones who are cashrich and can afford to wait till 2013 onwards to find a nice piece of property at a cheap price. Right now, nobody will be in a hurry to buy SG property, because everyone is waiting for the drop to come.

Don't forget it was merely 4-5 years ago that our property market hit it's low, so at this point of the 10-year market cycle, we're halfway there to another low.

Keep your gunpowder dry, people.

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