National Development Minister Mah Bow Tan revealed that the market cooling measures introduced by the government back in September 2009 had "some impact" in cooling down the property market, but were clearly not enough.
The government then opted to take on small, pre-emptive steps to prevent a bubble from forming rather than enforcing drastic measures when it is already formed. “If we take those drastic measures, then obviously the impact on buyers and the market generally will be more severe. So we decided to act now,” said Mr. Mah.
In the recently announced property measures to dampen speculation, a Seller’s Stamp Duty was imposed on all residential lands and properties purchased from February 20 and beyond, and sold within a year from the date of purchase.
In addition, loans provided by financial institutions were capped at 80 percent of the property value, down from the 90 percent limit allowed previously.
During a recent constituency event in Tampines, Mr. Mah told reporters that although it is hard to gauge the effectiveness of the new measures, “Any introduction of a seller stamp duty would probably make speculators think twice of flipping.”
“It will certainly help to dampen any speculative activity or any intention to speculate short term,” he said, acknowledging that this won’t prevent speculations totally. The measures “will not hurt genuine home buyers, as they are designed to ensure and encourage more financial prudence among buyers,” he added.
While Mr. Mah acknowledged the reduced loan limit might not discourage cash-rich speculators altogether, he said they now had to consider the stamp duty when they flip their property.
However, he refused to comment on further measures that the government might undertake if the property market fever does not cool down.
“It is a choice between not doing anything and letting the exuberance take over and then having to act when everything is too late,” Mr. Mah said in response to concerns over the uncertainties that these new measures will have on the market.
In September last year, the government removed the Interest-Only Loans and Interest Absorption Scheme to cool the property fever and to prevent any speculative bubble from forming. The government has also announced that it will resume land sales under the confirmed list of its land sales programme in H1 2010.