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By Kevin Lim
SINGAPORE, Jan 11 (Reuters) - Singapore on Friday increased a tax on foreign buyers as part of new measures to cool its housing market which has seen continued strong demand in the face of a weak economy and previous efforts to curb prices.
Foreigners and corporates who buy residential property in Singapore will now be subject to an additional buyer’s stamp duty (ABSD) of 15 percent of the purchase price, up from the previous 10 percent.
The Southeast Asian city-state also introduced, for the first time, a seller’s stamp duty of 5 to 15 percent on those who buy and then sell industrial properties such as warehouses and factories within three years.
Asian governments have been trying to cool their property markets amid capital inflows from the West that have pushed down interest rates and stoked inflation. Earlier this week, an official Chinese newspaper said stricter implementation of housing policies was needed to curb real estate prices.
Singapore private home prices rose 1.8 percent in the fourth quarter from the third, quickening from a gain of 0.6 percent in July-September despite government efforts in October to cool the market by capping the maximum tenure for housing loans.
Resale prices of government-built HDB apartments, which house about 80 percent of Singaporeans, rose 2.5 percent quarter-on-quarter, the fastest gain in five quarters. As for industrial property, prices are now double the levels of three years ago.
“Interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market. We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road,” Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said in a statement.
Interest rates in AAA-rated Singapore, a key Asian business and financial centre, have fallen to near record lows with banks charging as little as 1 percent per annum on housing loans.
Also part of Friday’s measures, Singapore citizens buying their second homes will be hit with an ABSD of 7 percent, while people with permanent residency status will pay an additional stamp duty of 5 percent on their first home purchase.
The ABSD had previously applied to citizens buying their third residential property and permanent residents getting their second.
In addition to the additional stamp duty, individuals applying for a second or subsequent housing loan will have to make a minimum cash payment of 25 percent, up from 10 percent previously.
In its statement, the Singapore government said most citizens buying their first home will not be hurt by the new measures. Some concessions will also be extended to selected groups of buyers, such as married couples with at least one Singaporean spouse who are purchasing their second property so long as they intend to sell their first residential property.
The government added that the new measures are temporary and will be reviewed in future depending on market conditions. (Reporting by Kevin Lim; editing by Ron Askew)