UPDATE 3-Singapore property shares plunge on gov't cooling move

* Turnaround in government policy a "shock"-analyst

* Global uncertainty raises questions on govt's timing

* Developers of higher-end real estate affected most (Updates shares, details)

By Charmian Kok and Kevin Lim

SINGAPORE, Dec 8 (Reuters) - Shares of Singapore developers fell sharply on Thursday after the government took new steps to cool property prices with the toughest measures aimed at foreign buyers who have become increasingly visible in the residential sector.

Effective Thursday, buyers who are not Singapore citizens or permanent residents will have to pay an additional 10 percent stamp duty when they buy a home, on top of the existing 1-3 percent in stamp duties.

The draconian measures, which coincide with growing global economic uncertainty and easing Singapore's housing price growth, surprised the market, as some were already forecasting a fall of as much as 15 percent in the city-state's home prices over the next 18 months.

"It probably signals a change in policy. The government had previously been very consistent in welcoming foreign investments, so that is why the new policy came as a shock," said Colin Tan, head of research and consultancy at Chesterton Suntec International.

Previous policy measures had targeted speculators by imposing an extra duty on those who bought and sold properties within four years and limiting the amount of loans available to prospective buyers.

Rising home prices and rapid immigration in recent years, however, became hot discussion topics during Singapore's general elections in May, which saw the ruling People's Action Party winning with the smallest majority in its history.

Many Singaporeans have blamed the influx of foreigners for driving the costs of living higher.

According to Citigroup, foreigners accounted for 18 percent of new home units sold in Singapore in the third quarter this year, exceeding the previous peak of 15 percent in 2007.

"We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low," said Deputy Prime Minister and Minister of Finance Tharman Shanmugaratnam.

"The additional buyer's stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road."

Singapore residential prices have held up well despite a slowing economy, helped by low interest rates and rising demand from overseas investors, in particular those from China.

"The main impact will be at the high-end segment where foreigners account for the bulk of purchases. The measures are going to cause this segment to come to a standstill for a few months," said Wilson Liew, an analyst at Kim Eng.

COMING AT THE WRONG TIME

The government's surprise announcement on Wednesday night hit shares of property developers on Thursday.

CapitaLand Ltd, Southeast Asia's largest developer, fell as much as 8 percent, while No.2 ranked City Developments Ltd dropped 7.7 percent

Shares of Ho Bee Investment Ltd, which focuses on high-end condominiums in Singapore and has very little exposure to other real estate segments unlike its larger rivals, fell by as much as 12.1 percent.

Wednesday's new measures also affected other property buyers. Permanent residents who already own a Singapore home are now required to pay an additional stamp duty of 3 percent when they buy second and subsequent properties. Citizens who purchase a third and subsequent homes will pay 3 percent.

Some critics, including the Real Estate Developers Association of Singapore (REDAS), criticised the government's move for coming at a time when economic growth is slowing.

"Given the uncertainty in current market outlook, the latest measures on additional buyer's stamp duty were unexpected," said Wong Heang Fine, CEO of Capitaland's Singapore residential arm and who is president of REDAS.

A manager of a Singapore-based real estate investment firm, who declined to be named, added: "It's coming at the wrong time. The market has already slowed down due to the punitive seller's stamp duty and the global crisis. Volumes have already dried up and speculation is almost gone."

Singapore private home prices rose 1.3 percent in the third quarter from April-June but the growth rate has slowed for eight consecutive quarters following government efforts to cool the market.

Even before the Wednesday's announcement, Goldman Sachs estimated in a report a 15 percent decline in Singapore's home prices over the next 18 months, with the prime segment facing more immediate pressure.

Another brokerage forecast a drop in residential prices in Singapore of 3-5 percent.

"There will be a selloff in the next three months at least," the broker said, asking not to be named because she is not authorized to speak to the media. "People who are thinking of buying, even if they can afford (to), are not going to buy."

"It is deterring even the locals from buying their third or fourth property, PRs (permanent residents) from buying a second property, and foreigners from entering the market at all," the broker said. (Additional reporting by Alex Frew McMillan in HONG KONG; Editing by Matt Driskill and Miyoung Kim)