The excess Buyer’s Press Duty (ABSD) of up to 15 per cent is perfect for the purchase of investment properties and serves as a housing taxes for foreigners. Meant to reduce the “investment viability” of properties and give owner-occupiers a higher possibility of buying a home, buying a second property became a more costly affair due to it.
Prior to the cooling measures were released, mass-market properties primarily catered to HDB upgraders and first-time home buyers, whilst higher-end properties were more for higher-income earners, investors and expatriates.
The ABSD made the 2nd group consider mass-market properties, pushing up prices in this market.
The rising Singapore interbank provided rate (Sibor), which is used to price mortgage loans, could harm livelihoods, as mortgage payments rise in tandem with it.
Typically, if mortgage payments start obtaining too high, owners would sell off the house and/or downgrade, to reduce debt exposure and reallocate resources.
With the absence of liquidity on the market, this will be difficult.
The home auction market is also starting to get uncomfortably active. A year ago, mortgagee product sales – whenever a bank places a property up for auction after its owner defaults upon servicing the house loan – almost doubled the preceding year’s number (“More homes go on the block among market turmoil”; Feb 19).
Together with the bleak economic view and weakened equities marketplace, if we blindly stick to the status quo, we are in for a tough year forward.