1. The news about the additional property cooling measures 2021 version are out everywhere.
2. The Additional Buyers’ Stamp Duty (ABSD) rates have gone up by an additional 5-15%.
3. Based on ValueChampion’s estimate of median condo price of $1.47m, a Singaporean who is buying a second home would now pay stamp duty worth $292,833! It doesn’t make financial sense to pay about 20% of the purchase price just on taxes alone. Even 0.28% commission on stocks got people complaining how expensive it is.
4. Of course some people will try to circumvent this. One way is a couple individually own a property. That would have no ABSD imposed. But there are other measures that may affect affordability.
5. One of which is a maximum loan that is capped at 75% of the property value. Assuming a person at 30 years old taking up a 30-loan at 1.5% interest rate, he would pay a monthly mortgage of $3,799.20.
6. The new measures have reduced the Total Debt Servicing Ratio (TDSR) from 60% to 55%. This means that this person need to earn at least $6,907 with no other debt obligations to qualify for the loan.
7. The median income for a 30yo male is $5,265. The difference isn’t that big and I believe two high-income couple can afford to buy properties separately. Which in this case, the government isn’t worried about them. The concerns are on those who are stretching their abilities to buy a private property.
8. As for the foreigners, their stamp duty is even more obscene. The ABSD has been raised from 20% to 30%. For the same price tag of $1.47m, a foreigner will pay $483,644 in stamp duties! This would definitely discourage some foreigners to buy a property in Singapore but not all.
9. Some rich foreigners may have other objectives other than getting a monetary return. It could be that they want to migrate to Singapore and they see this as a worthwhile price to pay for the stability and safety in this country. So I believe the foreigners will continue to come and we get the richer ones.
10. Singapore is a wealth magnet and will continue to do so because our survival depends on it. If Singapore is a superhero, we will be Batman. We got no resources except money. With money, we can buy resources (and even respect) and equipment to defend ourselves. Without which, everything collapses. The median wealth in Singapore is going to go up and yes, the rich-poor gap will widen too. We will also need to do something for those who couldn’t catch up fast enough.
