Showing posts with label 8. Singapore Property History. Show all posts
Showing posts with label 8. Singapore Property History. Show all posts
Tuesday, August 19, 2008
About this Blog
The fundamental case for property investing in the early 1990s was predicated on the rise of Singapore domestic demand. With economic stability and increased purchasing power built up over preceding years, it was time for asset enhancement in the 1990s. Young Singaporeans were being urged to marry and population control and immigration policies were being revised, adding to the demand for housing. Households were becoming increasingly double-income, increasing the purchasing power for big-ticket items. CPF balances were rising in-step with incomes, providing the financing means for purchasing expensive private property.
The sentimental case for property investing had been built up over the years. Since independence, the government had been promoting home ownership as a crucial tenet of nation building, and a huge majority of Singaporeans (~80-90%) owned the apartments they stayed in (mainly HDB). Hence increasingly over the years, property was seen as a good investment as prices were well-supported by the abovementioned government stand towards home ownership, the scarcity nature of Singapore property (the supply side), and perceived continued economic growth and stability (the demand side). Demand also trended towards more expensive private housing as people strove to upgrade their lifestyles. Many fellow Singaporeans will remember the Singapore dream built on the material five Cs: career/cash, credit cards, car, condominium, country club membership. Hence snob appeal and social aspirations accounted for an additional component of property demand meant for consumption.
Property as a comparative investing instrument was superior to other asset classes. There were few avenues for the less-educated to put their money: bonds had never been an Asian mass-market instrument, there was mass distrust of stocks due to their volatility (the market had shot up in 1993 and then dived back down in 1994), and money deposit rates were low. This also meant that housing loan rates were low (6% or less) and hence money was cheap. The unique standing of property as the only main investment instrument that could draw on the bulk of CPF funds enhanced its appeal; people tended not to think of it as "real money".
Given the above factors, property purchasing for consumption and investment soon turned into speculative buying. Stories of people buying an apartment for $500,000 and selling it for $700,000 a year later were part of the popular folklore. One apt description was that "people are buying property like groceries". This, of course, refers to the particular segment of property sales known as sub-sales, where people buy a property and then sell it off even before completion --- the most direct measure of speculative activity. At the height of the mania in the mid-1990s, there were the much-publicised midnight queues preceding condominium launches and the peaking of the highly reliable contrarian index known as the "market/coffeeshop auntie/uncle - buying, selling and recommending property" indicator.
All segments of the residential market were booming, including newbuilds, resales, public (HDB) and private housing (condominiums). From 1986 to 1996, the private residential price index rose by about 440%. About two-thirds of this gain was in the early 1990s up to 1996. See below for a graphical representation. There was a big merry-go-round as sellers became buyers of other properties, whose sellers then sourced for new residences. Over 1992-2002, 58% of the 3-million population changed homes. Among private homeowners, it was almost 70%. This created an upward spiral of property prices that was exacerbated by the speculative elements.
In 1996 the government introduced regulations to cool property speculation, which included heavy taxes on profits made from property sold within three years of purchase --- a measure targeted at property speculators. It had to end somewhere. Rocketing property prices were increasing the costs of living, driving some citizens out of Singapore and decreasing its long-term business competitiveness. The private residential property market prices collapsed; the end of the bull market was confirmed by the 1997-98 Asian financial crisis that destroyed foreign demand drivers from the ASEAN region. With the exception of a minor mini-rally in 2000, private housing prices had dropped 30-40% by 2003, since they peaked in 2Q96. The HDB resales market was better although it was never to reach the heights of 1996, primarily because the government was careful about its impact on ordinary, less well-off Singaporeans.
Still, the damage had been done. The term "negative equity" is used to describe a situation where the difference of the investment's market value and the debt incurred in financing it is negative --- a predicament that many Singaporeans have been stuck in. The plunge in residential-property prices also had an impact on private consumption - fewer owners were able to withdraw equity from their homes to borrow against the increase in value to finance other consumption. As a result of heavy investments in property, Singaporeans are asset-rich and cash-poor, even counting their CPF retirement money. It is an example of how investments based on solid fundamentals can turn into speculative buying egged on by peer pressure to "make money while it lasts"; when the primary driver is sentiment and liquidity rather than fundamentals, it can be prone to sudden drying of liquidity that causes prices to plunge. In this case, the reversing of government policy towards controlling asset inflation just happened to be the catalyst that caused the U-turning of residential property prices. Even if it had not taken place, the hit would still have been suffered in the 1997 Asian financial crisis. It was a disaster to happen, and as always, it was one that was precipitated by human envy and greed, in my view.
Posted by Anonymous in the Singapore Property Forum
May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase
Property Boom in the 90s: Why did Singaporeans become asset-rich and cash-poor
Nowadays, not a day passes without the papers reporting bullish news of prospective property deals; some argue that the residential property market is in the beginning of a new secular boom that could spread to the lower-end housing markets while others are significantly more cautious and cynical. In both camps the comparison is inevitably done with the property bull market of the early 1990s, when this asset class reached speculative heights and ultimately became a bubble that was pricked by consecutive blows of government regulatory measures and regional political trouble.The fundamental case for property investing in the early 1990s was predicated on the rise of Singapore domestic demand. With economic stability and increased purchasing power built up over preceding years, it was time for asset enhancement in the 1990s. Young Singaporeans were being urged to marry and population control and immigration policies were being revised, adding to the demand for housing. Households were becoming increasingly double-income, increasing the purchasing power for big-ticket items. CPF balances were rising in-step with incomes, providing the financing means for purchasing expensive private property.
The sentimental case for property investing had been built up over the years. Since independence, the government had been promoting home ownership as a crucial tenet of nation building, and a huge majority of Singaporeans (~80-90%) owned the apartments they stayed in (mainly HDB). Hence increasingly over the years, property was seen as a good investment as prices were well-supported by the abovementioned government stand towards home ownership, the scarcity nature of Singapore property (the supply side), and perceived continued economic growth and stability (the demand side). Demand also trended towards more expensive private housing as people strove to upgrade their lifestyles. Many fellow Singaporeans will remember the Singapore dream built on the material five Cs: career/cash, credit cards, car, condominium, country club membership. Hence snob appeal and social aspirations accounted for an additional component of property demand meant for consumption.
Property as a comparative investing instrument was superior to other asset classes. There were few avenues for the less-educated to put their money: bonds had never been an Asian mass-market instrument, there was mass distrust of stocks due to their volatility (the market had shot up in 1993 and then dived back down in 1994), and money deposit rates were low. This also meant that housing loan rates were low (6% or less) and hence money was cheap. The unique standing of property as the only main investment instrument that could draw on the bulk of CPF funds enhanced its appeal; people tended not to think of it as "real money".
Given the above factors, property purchasing for consumption and investment soon turned into speculative buying. Stories of people buying an apartment for $500,000 and selling it for $700,000 a year later were part of the popular folklore. One apt description was that "people are buying property like groceries". This, of course, refers to the particular segment of property sales known as sub-sales, where people buy a property and then sell it off even before completion --- the most direct measure of speculative activity. At the height of the mania in the mid-1990s, there were the much-publicised midnight queues preceding condominium launches and the peaking of the highly reliable contrarian index known as the "market/coffeeshop auntie/uncle - buying, selling and recommending property" indicator.
All segments of the residential market were booming, including newbuilds, resales, public (HDB) and private housing (condominiums). From 1986 to 1996, the private residential price index rose by about 440%. About two-thirds of this gain was in the early 1990s up to 1996. See below for a graphical representation. There was a big merry-go-round as sellers became buyers of other properties, whose sellers then sourced for new residences. Over 1992-2002, 58% of the 3-million population changed homes. Among private homeowners, it was almost 70%. This created an upward spiral of property prices that was exacerbated by the speculative elements.
In 1996 the government introduced regulations to cool property speculation, which included heavy taxes on profits made from property sold within three years of purchase --- a measure targeted at property speculators. It had to end somewhere. Rocketing property prices were increasing the costs of living, driving some citizens out of Singapore and decreasing its long-term business competitiveness. The private residential property market prices collapsed; the end of the bull market was confirmed by the 1997-98 Asian financial crisis that destroyed foreign demand drivers from the ASEAN region. With the exception of a minor mini-rally in 2000, private housing prices had dropped 30-40% by 2003, since they peaked in 2Q96. The HDB resales market was better although it was never to reach the heights of 1996, primarily because the government was careful about its impact on ordinary, less well-off Singaporeans.
Still, the damage had been done. The term "negative equity" is used to describe a situation where the difference of the investment's market value and the debt incurred in financing it is negative --- a predicament that many Singaporeans have been stuck in. The plunge in residential-property prices also had an impact on private consumption - fewer owners were able to withdraw equity from their homes to borrow against the increase in value to finance other consumption. As a result of heavy investments in property, Singaporeans are asset-rich and cash-poor, even counting their CPF retirement money. It is an example of how investments based on solid fundamentals can turn into speculative buying egged on by peer pressure to "make money while it lasts"; when the primary driver is sentiment and liquidity rather than fundamentals, it can be prone to sudden drying of liquidity that causes prices to plunge. In this case, the reversing of government policy towards controlling asset inflation just happened to be the catalyst that caused the U-turning of residential property prices. Even if it had not taken place, the hit would still have been suffered in the 1997 Asian financial crisis. It was a disaster to happen, and as always, it was one that was precipitated by human envy and greed, in my view.
Posted by Anonymous in the Singapore Property Forum
May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase
Saturday, July 26, 2008
About this Blog
Note that the highest RPI achieved to date is 136.9 in 1996, 4th quarter; due largely to the spillover speculation from the private property market. Demand was largely for bigger HDB flats like executive flats then. This in turn caused many Singaporeans to apply for upgrading to larger HDB flats with the belief that they'd make more money. This resulted in over-supply of new HDB flats in the subsequent years.
With the outbreak of the Asian Financial Crisis in 1997, coupled by the gross over-supply; HDB resale flats plunged in 1997-1998 for the first time.
HDB Resale Flats Price Index 1990 - 2008: Graph & Chart
RPI (Resale Price Index) Graph for HDB resale flats from 1990-2008
Note that the highest RPI achieved to date is 136.9 in 1996, 4th quarter; due largely to the spillover speculation from the private property market. Demand was largely for bigger HDB flats like executive flats then. This in turn caused many Singaporeans to apply for upgrading to larger HDB flats with the belief that they'd make more money. This resulted in over-supply of new HDB flats in the subsequent years.
With the outbreak of the Asian Financial Crisis in 1997, coupled by the gross over-supply; HDB resale flats plunged in 1997-1998 for the first time.
Table of RPI for HDB resale flats from 1990-2008
| HDB RPI (Resale Price Index) 1990-2008 | ||||
| 1Q | 2Q | 3Q | 4Q | |
| 1990 | 33.6 | 33.8 (0.6% ) | 34.6 (2.4% ) | 34.1 (-1.4%) |
| 1991 | 34.5 (1.2% ) | 35.2 (2.0% ) | 34.9 (-0.9% ) | 34.7 (-0.6%) |
| 1992 | 35.7 (2.9%) | 37.9 (6.2% ) | 38.7 (2.1%) | 39.6 (2.3% ) |
| 1993 | 41.8 (5.6% ) | 54.8 (31.1% ) | 65.9 (20.3%) | 67.8 (2.9% ) |
| 1994 | 69.7 (2.8% ) | 71.5 (2.6% ) | 75.5 (5.6% ) | 75.8 (0.4% ) |
| 1995 | 79.2 (4.5% ) | 88.4 (11.6%) | 93.6 (5.9% ) | 101.9 (8.9%) |
| 1996 | 111.4 (9.3% ) | 125.7 (12.8% ) | 133.3 (6.0%) | 136.9 (2.7% ) |
| 1997 | 136.3 (-0.4%) | 134.9 (-1.0%) | 129.4 (-4.1%) | 121.7 (-6.0%) |
| 1998 | 113.0 (-7.1%) | 108.3 (-4.2%) | 103.6 (-4.3% ) | 100.0 (-3.5%) |
| 1999 | 98.5 (-1.5%) | 99.9 (1.4%) | 108.0 (8.1%) | 110.4 (2.2%) |
| 2000 | 111.1 (0.6%) | 109.7 (-1.3% ) | 107.3 (-2.2%) | 104.9 (-2.2%) |
| 2001 | 101.3 (-3.4% ) | 99.7 (-1.6%) | 97.7 (-2.0%) | 96.3 (-1.4%) |
| 2002 | 95.5 (-0.8%) | 95.7 (0.2%) | 96.7 (1.0%) | 96.7 (0.0%) |
| 2003 | 98.2 (1.6%) | 100.3 (2.1%) | 38.7 (2.1%) | 39.6 (2.3% ) |
| 2004 | 104.1 (0.2%) | 105.4 (1.2% ) | 105.5 (0.1% ) | 106.6 (1.0% ) |
| 2005 | 106.7 (0.1%) | 101.6 (-4.8% ) | 101.2 (-0.4%) | 101.6 (0.4%) |
| 2006 | 101.8 (0.2%) | 102.8 (1.0%) | 102.6 (-0.2% ) | 103.6 (1.0%) |
| 2007 | 104.9 (1.3% ) | 108.0 (3.0% ) | 108.0 (3.0% ) | 121.7 (5.7% ) |
| 2008 | 126.2 (3.7% ) (-0.4%) | 131.7 (4.4% ) | ? | ? |
In comparison, the HDB resale boom in the 2008 is better supported by fundamental factors. Policies such as sublet of whole HDB flats, singles ownership scheme and more generous government subsidies all go towards supporting higher prices for HDB resale flats. At the same time, genuine demand for HDB flats has also been increased by the recent influx of foreign workers and the bulk of new citizens. On top of this, Minister for National Development Mah Bow Tan has repeatedly said that HDB would build only on "orders" (BTO = Build to Order), so the oversupply condition that happened in the 90s is quite unlikely to repeat this time round. While HDB flat owners may welcome this assurance, HDB home-buyers are getting increasingly stressed up by the soaring resale prices. One wonders how the government will ultimately balance the interests of the two parties. Meanwhile, it seems HDB resale price is set to rise further and possibly surpassing its 1996's peak.
May also want to read:
HDB Resales: West Sees Highest Price Increase
HDB contributes to Singapore record high inflation
HDB Income Ceiling for buying HDB flats not pro-family
Your investment in a home may be the sole-determinant of your financial success in your life
Saturday, February 9, 2008
About this Blog
Outbreak of SARS & Gulf War - The gloomiest year in the history of the Singapore property market.
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.
Graph shows the Property Price Index from 1960 (Click on the image to view details.)
Join the Smart Buyers Forum
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
Join the Smart Buyers Forum
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.
Join the Smart Buyers Forum
2007-2008
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.
2008(March)Saw the Singapore property market sank into a doldrum, with just about 2 property sales/day.
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?
Return to:
Major events that impact the Singapore property market from 1960 to 2007(I).
Join the Smart Buyers Forum
Chronology of Major events that impact the Singapore property market from (III): 2003 to 2008
2003Outbreak of SARS & Gulf War - The gloomiest year in the history of the Singapore property market.
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.
Graph shows the Property Price Index from 1960 (Click on the image to view details.)
Join the Smart Buyers Forum
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
Join the Smart Buyers Forum
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.
Join the Smart Buyers Forum
2007-2008
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.
2008(March)Saw the Singapore property market sank into a doldrum, with just about 2 property sales/day.
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?
Return to:
Major events that impact the Singapore property market from 1960 to 2007(I).
Join the Smart Buyers Forum
About this Blog
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.
Graph shows the Property Price Index (Click on the image to view details.)
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
Outbreak of SARS & Gulf War
To be continued:
Chronology of major events that impact the Singapore property market(III): 2003 to 2008
We shall look at the gloomiest decade in the Singapore property market, its subsequent recovery and finally, conduct an analysis of the lessons learned through these historical events.
Chronology of Major events that impact the Singapore property market (II): 1997 to 2003
1997The 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.
Graph shows the Property Price Index (Click on the image to view details.)
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
Outbreak of SARS & Gulf War
To be continued:
Chronology of major events that impact the Singapore property market(III): 2003 to 2008
We shall look at the gloomiest decade in the Singapore property market, its subsequent recovery and finally, conduct an analysis of the lessons learned through these historical events.
About this Blog
Chronology of Major events that impact the Singapore property market (I): 1960 to 1997
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. This topic covers events from 1960 to 2008. It reflects some perculiarities in the Singapore property market, largely the result of government policies. The topic concludes with an analysis of the implications of these events for predicting future trends.
1960
HDB formed to provide subsidised, high rise housing for Singaporeans.
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 started to soar.
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)
The hottest period in the history of the Singapore property market. The year saw property price soared to its historical peak that's yet to be surpassed.
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
The most turbulent year in the history of the Singapore property market.
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.
The Asian financial crisis. Property price plunged.
Reversal of Anti-speculation policy implemented in 1996.
To be continued ....
Chronology of major events that impact the Singapore property market(II): 1997 to 2003
May also want to read:
How to Calculate Rental Yield for Singapore Property
How to Calculate Property Tax for Singapore Property
Inland Revenue Authority of Singapore(IRAS): Stamp Duty Calculator
How to calculate Stamp Duty for Singapore Property
1960
HDB formed to provide subsidised, high rise housing for Singaporeans.
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 started to soar.
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)
The hottest period in the history of the Singapore property market. The year saw property price soared to its historical peak that's yet to be surpassed.
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
The most turbulent year in the history of the Singapore property market.
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.
The Asian financial crisis. Property price plunged.
Reversal of Anti-speculation policy implemented in 1996.
To be continued ....
Chronology of major events that impact the Singapore property market(II): 1997 to 2003
May also want to read:
How to Calculate Rental Yield for Singapore Property
How to Calculate Property Tax for Singapore Property
Inland Revenue Authority of Singapore(IRAS): Stamp Duty Calculator
How to calculate Stamp Duty for Singapore Property
Subscribe to:
Posts (Atom)
