Measures to Ensure a Stable and Sustainable Property Market
Joint Press Release by Ministry of National Development, Ministry of Finance, Ministry of Law and Monetary Authority of Singapore
1 Mr Mah Bow Tan, the Minister for National Development, announced today that the Government would take the following measures to ensure a stable and sustainable property market:
a) Reinstatement of the Confirmed List for the 1st Half 2010 Government Land Sales (GLS) Programme.
b) Removal of the Interest Absorption Scheme (IAS) and Interest-Only Housing Loans (IOL), with effect from today, i.e. 14 Sep 2009.
c) Non-extension of the Jan 2009 Budget assistance measures for the property market when the measures expire.
Reinstating the Confirmed List in 1st Half 2010 GLS Programme
2 Demand for uncompleted private housing units has picked up strongly since Feb 2009. The 10,017 units sold by developers in the first seven months of 2009 had already exceeded the 4,260 units sold for the whole of 2008. In response to the strong demand from home-buyers, developers have triggered four sites to date this year from the Reserve List of the 2nd Half 2009 GLS Programme, which together could yield about 1,600 units.
3 The Government will reinstate the Confirmed List for the GLS Programme in the 1st Half of 2010. While there are still 16 residential sites in the current Reserve List that can be triggered for sale by developers, MND will also replenish the supply when drawing up the 1st Half 2010 Reserve List to meet possible increases in demand. MND will announce the details of the 1st Half 2010 GLS Programme towards the end of the year.
Interest Absorption Scheme (IAS) and Interest-Only Housing Loans (IOL)
4 The Monetary Authority of Singapore will disallow the IAS and IOL with immediate effect from today, i.e. 14 Sep 2009. This measure will apply to all private residential projects. The only exception will be uncompleted private residential projects where the units had already been offered for sale under the IAS before 14 Sep 2009. The IOL will be disallowed with immediate effect.
5 The IAS and IOL are currently offered to buyers of uncompleted private residential properties. These schemes could encourage property speculation in a buoyant market where prices are rising rapidly, as they are forms of housing loans that entirely eliminate or substantially lower regular installment payments for property purchasers in the first few years before the properties are completed i.e. issued Temporary Occupation Permit. Under the schemes, a property purchaser will not have to make any significant payment, apart from the upfront 10-20% down-payment, until the housing project is completed. Details of these schemes are in Annex 1 (16.5 KB).
6 Genuine home-buyers can continue to purchase private housing under the standard payment scheme. The removal of the Interest Absorption Scheme and Interest-Only Loans will also encourage prospective home-buyers to consider carefully their ability to afford the properties over the long term and not rush into any purchases. This will promote a more healthy and sustainable property market in the long-run.
Property-Related Budget 2009 Assistance Measures
7 A number of measures were announced in Budget 2009 in January this year to help stabilize the property market, in view of the sharp fall in demand and considerable uncertainty in the economic outlook at the time. Please see details in Annex 2 (38.3 KB). These measures provided developers greater flexibility to adjust supply in response to a property market downturn.
8 In view of the recent strong demand for private housing and improved conditions in the property market, the measures will not be extended when they expire. The measures are:
a) Allowing one-year extension of project completion period
b) Allowing re-assignment of Government Land Sale (GLS) sites and private land owned by foreign developers
c) Giving developers up to four years to dispose of all private residential units in the development
d) Allowing developers to rent out unsold private residential units for a maximum of four years
e) Allowing up to 2 years of property tax deferral for land under development
9 The first four measures will expire on 21 Jan 2010, and the last measure on 21 Jan 2011.
Issued by the Ministry of National Development, Ministry of Finance, Ministry of Law and Monetary Authority of Singapore
14 September 2009