Friday, September 14, 2007
About this Blog
1960
HDB formed and 12,000 flats built between 1960-70; Property Tax introduced
1968
CPF implements Public Housing Schemes for home ownership (which sees 90% of Singaporeans owning their homes today).
1972
Inflow of foreign funds and the beginning of Singapore's golden years.
1973
Property curbs introduced: foreigners not allowed to buy residential properties; property tax surcharge w.e.f. 1974
1974
Oil Crisis which afflicted the US economy of which Singapore was very dependant on. The year saw a plunge in Singapore property price and Singaporeans learned how their home price has every thing to do with the US economy.
1976
Introduction of Residential Property Act: Foreigners allowed to purchase flats in buildings of 6 levels or higher.
Graph shows the Property Price Index (Click on the image to view details.)
1981
CPF implements Residential Properties Scheme for private home ownership which allowed Singaporeans to use up to 80% of their CPF ordinary account savings for property purchase. Property price rose 3 to 4 times e.g. HDB flats bought in the 1970s were in the range of $10K but in the 1980s, HDB flats typically cost $40K-$100K. (Note from the graph that the property price index rose from ~10 in the 1970s to ~50 in the 1980s)
1984/1985
Economic recession. (Note from the graph that the property price index fell from ~50 in the 1983's peak to ~30 in the 1986)
1987
CPF implements Minimum Sum Scheme to ensure that Singaporeans have enough CPF for their retirement.
1988
Total CPF withdrawal for the purchase of private housing increased to 100% of the value of the property (Nov 1988). Property price escalated.
1989 (Aug)
PRs allowed to buy HDB flats and HDB owners allowed to invest in private property.
1990 (Aug)
Gulf War - which saw a small dip in property price that lasted as quickly as US declared victory. Property price continued to escalate after that.
1991 (Oct)
HDB allowed single citizens above 35 to buy three-room flats
1993 (Oct)
CPF rules relaxed and home buyers allowed to withdraw larger CPF amounts and HDB flat buyers allowed to take higher mortgages. Property price soared.
1995 (Aug)
Government introduced Executive Condominium which were sold for about 10% less than 99-year lease condoniniums. The launches were heavily oversubscribed, typically with 10 applicants to 1 unit.
1996 (Feb)
Exemption limit for owner-occupied property increased to the first $150,000 (previously $75,000) of its NAV; Exemption limits on estate duty for residential properties and movable assets, including CPF balances, raised to $9 million and $600,000 respectively. CPF balances in excess of $600,000 will continue to be exempt; property tax rate from 13% to 12%; Stamp duty adjustment on property transfers; reduction on stamp duty rates on property leases.
1996 (May)
Anti-speculation measures implemented - 80% financing restriction for property purchase; 7,000-8,000 residential units to be released in 1997; 30-month project completion period (PCP) for private developments under QC scheme; 5% p.a. penalty imposition for PCP extension; stamp duty extended to buyers of all sales and sub-sales of uncompleted properties; new stamp duty on those who sell properties within years; tax on gains from properties sold within 3 years of purchase. Property price fell for the first time after 10 long years of relentless up trend.
1997 (Feb) Budget 1997
Concessionary property tax rate of 4% on the annual value of the residential house for home owners who rebuild their houses for their own subsequent occupation during the period when their houses are undergoing reconstruction
1997
Measures to curb abuse of HDB subsidised mortgage e.g. HDB mortgage pegged to bank rate.
1997
The Asian financial crisis. Property price plunged.
Reversal of Anti-speculation policy implemented in 1996:
Removal of $30,000 cap
HDB owners allowed to book a new private property only after occupying the flat for 5years.
Government sale sites deferred and project completion period (PCP) extended for up to 8 yearsl.
Stamp duty for sellers was suspended.
1998
More Property policy reversal:
Land sales were suspended; 15% property tax rebate for commercial and industrial properties commencing July 1998; Property tax exemption for land under development reinstated; exemption will be for a period of up to 5 years,
and will apply from the time construction begins to the time the TOP is granted
1998 (Jun) Off-Budget measures implemented including more property policy revisions. Land sales were suspended and more tax
exemptions granted; stamp duty deferred for buyer of uncompleted properties until TOP or subsequent sale.
1998 (Nov) 10% CPF housing grant cut; more tax rebates
1999
1999 (Feb) Budget 1999 -The 55% property tax rebate on industrial and commercial properties, first announced in the June 1998 off budget
measures, will be extended by another year to 30 June 2000 ( 99)
1999 (May) Second CPF housing grant cut.
1999 (Sep) Government to resume land sales in 2000
2000
2000 (Feb) Budget 2000 - Tax exemption on land under development withdrawn; change will only affect new projects; Projects which
have been granted tax exemption will continue to enjoy the concession for a maximum period of 5 years or upon
completion, whichever is earlier; DC rates revised - increased by 27% on average for residential land (Feb 00); Property
tax rebate extended up to June 2001, at reduced rate of 25% (from 55%); estate duty exemption for Singapore residential
property used for business activity;
2000 (June) HDB owners required to seek approval before booking private property even if they have fulfilled the 5-year time bar.
Global oil price hike
2001
2001 Collapse of dotCom bubble
2001 (June) GLS - Introduction of Reserve List System for 2H 2001
2001 (Aug) MND announced that less than 8,000 new public flats will be built in 2001
2001 (Sept) 11th Sep 01 attack on the World Trade Centre in New York
2001 (Oct) Off-Budget 2001- Capital gains tax was lifted, foreigners were allowed to use SingDollar for housing loan, GLS
(Confirmed List ) was suspended. Sites would only be made available through the Reserve List. Property tax was exempted for a period of 2 years for land under development.
2002
2002 (Apr) Recommendations by ERC sub-committee on taxation, CPF, wages and land.
2002 (May) Budget 2002 - Loss-transfer system of group relief; GST increased from 3% to 5% from 1 Jan 2003
2002 (July ) Refocusing the CPF System - Minimum Sum will be raised to $80,000 on 1 July 2003, of which $40,000 can be in
property; limit CPF withdrawals for housing to 150% of the value of property and bring the limit down to 120% in equal
steps over 5 years
2002 (Sep) For purchase of ECs, a minimum 10% of the downpayment will have to be paid in cash, while the remaining 10% can be
paid out using CPF funds
2002 (Dec) Extension of 2001 Off-Budget Measures - Fixed rebate of up to $8,000 per year for all commercial and industrial
properties; also, 30% rebate for the remaining property tax payable; 2 years property tax exemption for all land under
development with immediate effect; stamp duty rates reduced by 30% on all instruments.
2002 (Dec) GLS Confirmed List suspension extended to 1H2003. Defer the release of BFC site for sale in 1H2003
2003
2003 (Early) Iraq War & SARS Outbreak
2003 (Feb) Budget 2003 - e.g. Defer restoration of CPF employer contribution rate for 2 years; lower CPF salary ceiling over 2 years;
new property tax rebate for commercial and industrial properties for 2H03.
2003 (Apr) $230 million on SARS Relief Package e.g. Additional property tax rebates for commercial properties; higher property tax
& 100% rebate of TV licence fees rebates for gazetted tourist hotels; cess rebate
2003 (Apr) Single Purpose Company Requirement for GLS sites lifted
2003 (July) Formation of HDB Corp and announcement on the public housing building programme. Programme would be opened up
to the private sector – starting with 10% in July 2006 and reaching 50% in July 2008.
2004
2004 (Jun) Continued Suspension of Confirmed List. BFC Site for Sale on Reserve List
2004 (Aug) Government of Singapore - New Cabinet
2004 (Aug) Government’s invitation to foreigners to buy land in Sentosa Cove
2004 (Dec) GLS : No Confirmed List in 1H 2005
2004 (Dec) Tsunami Tragedy
2005
2005 (Feb) Budget 2005 - REITs Incentives ; $40 mil Orchard Road Investment Enhancement Plan by STB
2005 (Apr) Government Announced Plans to Build 2 Integrated Resorts
2005 (July) Changes to the Residential Property Act - all existing and new QC applicants will be granted project completion period of 6
years from date of QC issuance (current 3-4 years); Bankers' Guarantee for QC application reduced from current 50% to 10% w.e.f. Mar 2006
2005 (July) MND Announcement on Policy Changes Affecting the Property Market - Loan-to-Value Limit raised from 80% to 90%;
Cash payment for residential properties reduced from 10% to 5%; non-related singles allowed to use their CPF to jointly but private residential properties; phase out of the Non-Residential Properties Scheme in July 2006; Restriction on the use of CPF savings for multiple properties
2005 (Nov) GLS Programme – 1 commercial site at Collyer Quay in the Confirmed List
2005 (Nov) Waiver of security requirement for developers offering Deferred Payment Scheme after the Issue of TOP
2006
Budget 2006 (Feb) - tax incentives to broaden capital markets like tax exemption on foreign-sourced interest and trust
distribution received by REITs expansion; lift property tax surcharge; review of the administrative conditions for Industrial
Building Allowances; Progress Package give-out.
2006 (June) GLS Programme - 1 commercial site at Beach Road/Middle Road in the Confirmed List; further extended for reassignment
of GLS Sites by successful tenderers and private land by foreign housing developers by one year to 30 June 2007
2006 (Oct) The First Public Housing Project under the Design, Build & Sell Scheme (DBSS) was launched for sale
2006 ( 15 Dec) Stamp duty concession withdrawn – all property buyers to pay stamp duty (at up to 3% for properties worth over $360k)
within 14 days of the date of acceptance of an Option. As transitional measure, buyers who accept an Option or sign S&P
between 15-30 Dec 2006 will have until 14 March 2007 to pay the stamp duty.
2007
2007(Aug)Increase in Development Charge. Based on the announced rates, the jump is estimated to be about 55 percent.
2007(Oct)Withdraw the deferred payment scheme for the sale of uncompleted private residential and commercial properties with effect from 26 Oct 2007.
These policies (together with the increasingly uncertain global economic outlook) put a brake on enbloc sales and practically purged the market of speculators.
Some thoughts:
1. A quick glance at the graph above shows that property price escalated relentlessly from 1993 to 1996. The events that fuelled the property price were in great part due to the relaxation of using CPF monies for property investment.
Question: Is this likely to repeat itself in the years to come? given that the Singapore government is increasingly concerned about the aging population and the lack of CPF for retirement.
2. Another reason for the soaring property price in the 1990s was the years of double digit economic growth.
Question: Is Singapore still likely to enjoy years of double digit economic growth in the years ahead?
3.Property price plummeted in 1997 due to the Asian Financial Crisis, and again in 2003 due to Gulf War and SARS. It took up to 2005 for the market to show sign of recovery, and in fact, up to 2007 for the recovery to reach the mass market.
Question: What are the risks of similar events taking place in the years ahead? Looking at the past cycle, what is your assessment on the impact on the Singapore property market if such events should recur?
Question:
Major events that impact the Singapore property market from 1960 to 2007
A study of major events that impact the Singapore property market will better help one to predict the market trends, e.g. like which part of history is likely repeat itself etc.1960
HDB formed and 12,000 flats built between 1960-70; Property Tax introduced
1968
CPF implements Public Housing Schemes for home ownership (which sees 90% of Singaporeans owning their homes today).
1972
Inflow of foreign funds and the beginning of Singapore's golden years.
1973
Property curbs introduced: foreigners not allowed to buy residential properties; property tax surcharge w.e.f. 1974
1974
Oil Crisis which afflicted the US economy of which Singapore was very dependant on. The year saw a plunge in Singapore property price and Singaporeans learned how their home price has every thing to do with the US economy.
1976
Introduction of Residential Property Act: Foreigners allowed to purchase flats in buildings of 6 levels or higher.
Graph shows the Property Price Index (Click on the image to view details.)
1981
CPF implements Residential Properties Scheme for private home ownership which allowed Singaporeans to use up to 80% of their CPF ordinary account savings for property purchase. Property price rose 3 to 4 times e.g. HDB flats bought in the 1970s were in the range of $10K but in the 1980s, HDB flats typically cost $40K-$100K. (Note from the graph that the property price index rose from ~10 in the 1970s to ~50 in the 1980s)
1984/1985
Economic recession. (Note from the graph that the property price index fell from ~50 in the 1983's peak to ~30 in the 1986)
1987
CPF implements Minimum Sum Scheme to ensure that Singaporeans have enough CPF for their retirement.
1988
Total CPF withdrawal for the purchase of private housing increased to 100% of the value of the property (Nov 1988). Property price escalated.
1989 (Aug)
PRs allowed to buy HDB flats and HDB owners allowed to invest in private property.
1990 (Aug)
Gulf War - which saw a small dip in property price that lasted as quickly as US declared victory. Property price continued to escalate after that.
1991 (Oct)
HDB allowed single citizens above 35 to buy three-room flats
1993 (Oct)
CPF rules relaxed and home buyers allowed to withdraw larger CPF amounts and HDB flat buyers allowed to take higher mortgages. Property price soared.
1995 (Aug)
Government introduced Executive Condominium which were sold for about 10% less than 99-year lease condoniniums. The launches were heavily oversubscribed, typically with 10 applicants to 1 unit.
1996 (Feb)
Exemption limit for owner-occupied property increased to the first $150,000 (previously $75,000) of its NAV; Exemption limits on estate duty for residential properties and movable assets, including CPF balances, raised to $9 million and $600,000 respectively. CPF balances in excess of $600,000 will continue to be exempt; property tax rate from 13% to 12%; Stamp duty adjustment on property transfers; reduction on stamp duty rates on property leases.
1996 (May)
Anti-speculation measures implemented - 80% financing restriction for property purchase; 7,000-8,000 residential units to be released in 1997; 30-month project completion period (PCP) for private developments under QC scheme; 5% p.a. penalty imposition for PCP extension; stamp duty extended to buyers of all sales and sub-sales of uncompleted properties; new stamp duty on those who sell properties within years; tax on gains from properties sold within 3 years of purchase. Property price fell for the first time after 10 long years of relentless up trend.
1997 (Feb) Budget 1997
Concessionary property tax rate of 4% on the annual value of the residential house for home owners who rebuild their houses for their own subsequent occupation during the period when their houses are undergoing reconstruction
1997
Measures to curb abuse of HDB subsidised mortgage e.g. HDB mortgage pegged to bank rate.
1997
The Asian financial crisis. Property price plunged.
Reversal of Anti-speculation policy implemented in 1996:
Removal of $30,000 cap
HDB owners allowed to book a new private property only after occupying the flat for 5years.
Government sale sites deferred and project completion period (PCP) extended for up to 8 yearsl.
Stamp duty for sellers was suspended.
1998
More Property policy reversal:
Land sales were suspended; 15% property tax rebate for commercial and industrial properties commencing July 1998; Property tax exemption for land under development reinstated; exemption will be for a period of up to 5 years,
and will apply from the time construction begins to the time the TOP is granted
1998 (Jun) Off-Budget measures implemented including more property policy revisions. Land sales were suspended and more tax
exemptions granted; stamp duty deferred for buyer of uncompleted properties until TOP or subsequent sale.
1998 (Nov) 10% CPF housing grant cut; more tax rebates
1999
1999 (Feb) Budget 1999 -The 55% property tax rebate on industrial and commercial properties, first announced in the June 1998 off budget
measures, will be extended by another year to 30 June 2000 ( 99)
1999 (May) Second CPF housing grant cut.
1999 (Sep) Government to resume land sales in 2000
2000
2000 (Feb) Budget 2000 - Tax exemption on land under development withdrawn; change will only affect new projects; Projects which
have been granted tax exemption will continue to enjoy the concession for a maximum period of 5 years or upon
completion, whichever is earlier; DC rates revised - increased by 27% on average for residential land (Feb 00); Property
tax rebate extended up to June 2001, at reduced rate of 25% (from 55%); estate duty exemption for Singapore residential
property used for business activity;
2000 (June) HDB owners required to seek approval before booking private property even if they have fulfilled the 5-year time bar.
Global oil price hike
2001
2001 Collapse of dotCom bubble
2001 (June) GLS - Introduction of Reserve List System for 2H 2001
2001 (Aug) MND announced that less than 8,000 new public flats will be built in 2001
2001 (Sept) 11th Sep 01 attack on the World Trade Centre in New York
2001 (Oct) Off-Budget 2001- Capital gains tax was lifted, foreigners were allowed to use SingDollar for housing loan, GLS
(Confirmed List ) was suspended. Sites would only be made available through the Reserve List. Property tax was exempted for a period of 2 years for land under development.
2002
2002 (Apr) Recommendations by ERC sub-committee on taxation, CPF, wages and land.
2002 (May) Budget 2002 - Loss-transfer system of group relief; GST increased from 3% to 5% from 1 Jan 2003
2002 (July ) Refocusing the CPF System - Minimum Sum will be raised to $80,000 on 1 July 2003, of which $40,000 can be in
property; limit CPF withdrawals for housing to 150% of the value of property and bring the limit down to 120% in equal
steps over 5 years
2002 (Sep) For purchase of ECs, a minimum 10% of the downpayment will have to be paid in cash, while the remaining 10% can be
paid out using CPF funds
2002 (Dec) Extension of 2001 Off-Budget Measures - Fixed rebate of up to $8,000 per year for all commercial and industrial
properties; also, 30% rebate for the remaining property tax payable; 2 years property tax exemption for all land under
development with immediate effect; stamp duty rates reduced by 30% on all instruments.
2002 (Dec) GLS Confirmed List suspension extended to 1H2003. Defer the release of BFC site for sale in 1H2003
2003
2003 (Early) Iraq War & SARS Outbreak
2003 (Feb) Budget 2003 - e.g. Defer restoration of CPF employer contribution rate for 2 years; lower CPF salary ceiling over 2 years;
new property tax rebate for commercial and industrial properties for 2H03.
2003 (Apr) $230 million on SARS Relief Package e.g. Additional property tax rebates for commercial properties; higher property tax
& 100% rebate of TV licence fees rebates for gazetted tourist hotels; cess rebate
2003 (Apr) Single Purpose Company Requirement for GLS sites lifted
2003 (July) Formation of HDB Corp and announcement on the public housing building programme. Programme would be opened up
to the private sector – starting with 10% in July 2006 and reaching 50% in July 2008.
2004
2004 (Jun) Continued Suspension of Confirmed List. BFC Site for Sale on Reserve List
2004 (Aug) Government of Singapore - New Cabinet
2004 (Aug) Government’s invitation to foreigners to buy land in Sentosa Cove
2004 (Dec) GLS : No Confirmed List in 1H 2005
2004 (Dec) Tsunami Tragedy
2005
2005 (Feb) Budget 2005 - REITs Incentives ; $40 mil Orchard Road Investment Enhancement Plan by STB
2005 (Apr) Government Announced Plans to Build 2 Integrated Resorts
2005 (July) Changes to the Residential Property Act - all existing and new QC applicants will be granted project completion period of 6
years from date of QC issuance (current 3-4 years); Bankers' Guarantee for QC application reduced from current 50% to 10% w.e.f. Mar 2006
2005 (July) MND Announcement on Policy Changes Affecting the Property Market - Loan-to-Value Limit raised from 80% to 90%;
Cash payment for residential properties reduced from 10% to 5%; non-related singles allowed to use their CPF to jointly but private residential properties; phase out of the Non-Residential Properties Scheme in July 2006; Restriction on the use of CPF savings for multiple properties
2005 (Nov) GLS Programme – 1 commercial site at Collyer Quay in the Confirmed List
2005 (Nov) Waiver of security requirement for developers offering Deferred Payment Scheme after the Issue of TOP
2006
Budget 2006 (Feb) - tax incentives to broaden capital markets like tax exemption on foreign-sourced interest and trust
distribution received by REITs expansion; lift property tax surcharge; review of the administrative conditions for Industrial
Building Allowances; Progress Package give-out.
2006 (June) GLS Programme - 1 commercial site at Beach Road/Middle Road in the Confirmed List; further extended for reassignment
of GLS Sites by successful tenderers and private land by foreign housing developers by one year to 30 June 2007
2006 (Oct) The First Public Housing Project under the Design, Build & Sell Scheme (DBSS) was launched for sale
2006 ( 15 Dec) Stamp duty concession withdrawn – all property buyers to pay stamp duty (at up to 3% for properties worth over $360k)
within 14 days of the date of acceptance of an Option. As transitional measure, buyers who accept an Option or sign S&P
between 15-30 Dec 2006 will have until 14 March 2007 to pay the stamp duty.
2007
2007(Aug)Increase in Development Charge. Based on the announced rates, the jump is estimated to be about 55 percent.
2007(Oct)Withdraw the deferred payment scheme for the sale of uncompleted private residential and commercial properties with effect from 26 Oct 2007.
These policies (together with the increasingly uncertain global economic outlook) put a brake on enbloc sales and practically purged the market of speculators.
Some thoughts:
1. A quick glance at the graph above shows that property price escalated relentlessly from 1993 to 1996. The events that fuelled the property price were in great part due to the relaxation of using CPF monies for property investment.
Question: Is this likely to repeat itself in the years to come? given that the Singapore government is increasingly concerned about the aging population and the lack of CPF for retirement.
2. Another reason for the soaring property price in the 1990s was the years of double digit economic growth.
Question: Is Singapore still likely to enjoy years of double digit economic growth in the years ahead?
3.Property price plummeted in 1997 due to the Asian Financial Crisis, and again in 2003 due to Gulf War and SARS. It took up to 2005 for the market to show sign of recovery, and in fact, up to 2007 for the recovery to reach the mass market.
Question: What are the risks of similar events taking place in the years ahead? Looking at the past cycle, what is your assessment on the impact on the Singapore property market if such events should recur?
Question:
Subscribe to:
Post Comments (Atom)
0 comments:
Post a Comment
Dear visitors:
Your comments are most welcome!
The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.
Smart Buyer :)