We supposed many home owners are worry about if Singapore property market is able to withstand the stress test during this COVID 19 pandemic crisis. Let us look way back from 1994 to 2019 on how Singapore had reacted during each crisis.
Asian Financial Crisis(AFC): happened in May 1997. Back then, government had introduced anti-speculation measures in 1996 including capital gain tax of up to 100% in first year. However, the effectiveness of the measures came a little too late when AFC happened. Many home owners who having multiple properties are exposed to high loan-income ratio which resulted a series of panic selling during AFC period. The price nose dived to all time low in 1998. It was a ‘V’ shape recovery when price came back up till 1999 and government resume GLS scheme to curb the home price from escalating too fast.
Dot.com bubble: happened in 2001. Many dot.com companies went burst during this period. And government lifted capital gain tax and allow foreigners to borrow from local banks to finance borrowing for purchasing Singapore property. However, this price didn’t recover much as September 11 happened in 2001. A year later, SARS happened from 2002 to 2004. Singapore market is facing a slow recovery.
Two Integrated Resorts: announced in 2005. Government made a bold attempt to rejuvenate the economy by introducing two integrated resorts to be build in Marina Bay and Sentosa. This had certainly attracted worldwide attention especially integrated resort operators. This was a immediate boost to property market which the price on bull run till 2007. New launches are being snapped up by floors by buildings in matter of days.
Global Financial Crisis: happened in 2008. After the property market was on bull run for about 2 years, it went down till 2009. During this period, banks introduced a unique scheme (interest adsorption scheme) after deferred payment scheme was removed by government. Even though H1N1 happened during 2009 to 2010, Singapore market do not affected too much in fact the prices continue to rise. By end 2010, government came out first round of cooling measure by reducing loan to value from 90% to 80% and seller stamp duty at 3% during first year. Strong foundation and solid economy continue to propel property market further even after 7 rounds of cooling measure to cool the market.
Total Debt Servicing Ratio (TDSR): government introduced TDSR on June 2013. This is the game changer which effectively curb many investors and speculators out of the market. With restriction to only 60% of income on borrowing, investors with multiple properties find it tough to leverage on loans to buy properties hence the price corrected during 2013 to 2016. During these 3 years, property market had stabilized without any speculating element. Most home owners who bought can only own up to 2 properties due to strict restriction and higher down-payment required. By March 2017, government decided to relax the cooling measure by lowering the holding period of seller stamp duty from 4 years to 3 years. This sparked a much delay interest in property after 3 years of down turn, prices in 2017 went straight up till 2018. Government again intervene the market in a attempt to curb the prices from rising too fast.
Additional Buyer stamp duty (ABSD): ABSD increased across the board happened in 10 July 2018. Singaporean 2nd property 7% to 12%. PR 2nd property from 10% to 15%. Foreigner 1st property 20%. Corporate entities buying any residential property raised from 15% to 25%. Developers buying residential property will have to pay additional 5% non-remittable ABSD upfront upon purchase. This effectively slow down the growth of the price in 2019.