Has Singapore's government finally pulled the right plug on the home price surges bedeviling the city-state?
The government late Tuesday issued another round of cooling measures for its real estate sector, this time targeting the subsidized public housing market – known as Housing Development Board (HDB) apartments – which house 80 percent of the country's citizens.
The measures include shortening the maximum loan tenure to 25 years from 30 years, and reducing the mortgage ratio limit against the borrower's salary to 30 percent from 35 percent previously.
Permanent residents (PR), who account for about 20 percent of the HDB secondary market and aren't allowed to buy flats directly from the government, must also now also wait three years after receiving PR status to purchase a resale subsidized property. There was no wait prior to Tuesday's new ruling.
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The city state has been struggling to keep in check soaring property prices – a major issue of discontent – which have surged around 60 percent in the past three years, no thanks to a global wave of easy money from the U.S. quantitative easing.
This is the ninth round of cooling measures announced by the government since 2009. While transaction volumes have been affected periodically by each tranche of measures, there has not been any meaningful drop in prices.
Analysts say the latest move will impact HDB upgraders the most, which will in turn affect the private property market.
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"If the resale HDB market starts to cool down, it will affect the sentiment of HDB upgraders looking to buy private property and adversely affect the (private) mass-market segment," David Lum, an analyst at Daiwa, said in a report. Meanwhile, amid tighter home loan requirements, "the negative knock-on effects across property segments could be more direct and more immediate."
"We see no positive implications for home prices (HDB or private)," he added, expecting home prices to fall by 18-20 percent from the end of 2012 through the end of 2015.