If you’ve been wisely saving your dough and watching the headlines like a hawk, you’d know that the property prices in Singapore is declining fast. If you’ve played it right, you probably have been saving up your money to try to time your entry where prices are falling. Find out more on the 3 Reasons You Should Invest In Real Estate.

Singapore Housing Cycle

Any savvy investor will know that markets trade in cycles. The cycle can generally be categorised into four key phases- (1) Recovery, (2) Boom, (3) Slump and (4) Stabilisation.

Singapore Housing Cycle and Property Measures– Where Are We?

  • Recovery Phase

In this phase, rental rate start to increase and prices of properties begin to rise slowly, starting with those in the central business districts(CBD). Buyers are usually slow to enter the market due to the uncertainty of recovery. Interest rates are usually low at this moment.

  • Peaking Phase

This phase is where rental yields and prices start to rise, with strong demand driving developers to increase new projects and launches. Vacancy rates are low and new buyers may jump into the market at this moment. This is also when property finance is easy to obtain.

  • Falling Phase

Increasing vacancy rates and falling prices is typical during this phase of the cycle. Construction of new projects may still be ongoing but developers usually hold out launches in hope of better prices. Rental rates fall at an increasing rate and sellers may get rid of properties at below valuation, with length of time to sell a property increasing significantly.

  • Stabilisation

This can be considered the trough of the market, with vacancy rates high and sellers not likely to achieve their asking price. Properties may stay in the market for a long time with property prices falling rapidly before bottoming out.

Where are we in the property cycle?

Looking at this chart, you will find that the current Singapore property market cycle is in the falling phase. Prices are just starting to come off, with rental rates falling but sellers can still be choosy about tenants, especially in prime central areas.

Cooling Measures

A number of new rulings for the property market was introduced in the last 2 years to cool off the strong buying sentiments. Here is a brief list of the measures implemented:

  • Additional Buyer Stamp Duty for Residential Property
Additional Buyer Stamp Duty1st property2nd & 3rd Property
Singapore CitizenNil7% for second, 10% for third
Singapore PR5%10% each
Foreigners15%15% each
  • Sellers’ Stamp Duty
Residential Property Sold inYear 1Year 2Year 3
Duty rates since Feb 2010Same as basic buyer stamp duty(around 3%)NilNil
Duty rates since Aug 2010Same as basic buyer stamp duty(around 3%)2/3 of basic buyer stamp duty1/3 of basic buyer stamp duty
Duty rates since Jan 201116%12%4%
  • Total Debt-Servicing Ratio (TDSR)

Banks are required to consider borrowers’ other debt obligations before granting mortgage loans. The borrower’s total monthly repayments of his debt obligations should not exceed 60% of his gross monthly income.

  • Reduction in Maximum Loan Tenure

Maximum tenure for HDB housing loans is reduced from 30 years to 25 years. The Mortgage Servicing Ratio (MSR) limit is reduced from 35% to 30% of the borrower’s gross monthly income.

Maximum tenure of new housing loans and re-financing facilities granted by banks for the purchase of HDB flats (including DBSS flats) is reduced from 35 years to 30 years.

Find out more on the 3 Types of Real Estate in Singapore.

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).