BUY AND SELL A SINGAPORE PROPERTY FROM THE COMFORT OF YOUR HOUSE

It is a common practice for HDB flat owners to buy a private property such as a condo before the Government close the loophole on decoupling and implemented Additional Buyer Stamp Duty (ABSD).  Singaporeans who bought their second residential property before 12 January 2013 need not pay ABSD.  It is not uncommon to hear that people who own a HDB flat went on to buy a private property such as a condo.  HDB flat owners must fulfill the five-years minimum occupation period (MOP) before they can sell their flat to buy a private residential property. Else, Singaporeans will incur an additional buyer’s stamp duty of 17 per cent on the purchase of their second residential property.  Mr Chan, a HDB flat owner in Jurong, said that he is reluctant to sell his flat because it is fully paid and generates a high rental yield.  There were more than 266 HDB flats sold for more than one million dollars between January and September 2022.  Million-dollar flats make up about 1 per cent of all resale transactions in the last two years, Minister for National Development Desmond Lee said in Parliament. Around 3 per cent of HDB flat owners own at least one private residential property as of October. About 45 per cent of these owners are not living in their HDB flats as they have rented out their whole flat, said Mr Lee. For the remaining 97 per cent of the flat owners who do not own any private residential property, about 13 per cent are renting out their whole flat or bedrooms within their flat.  The resale price index has been trending up for 10 consecutive quarters. It monitors the general price movements in the resale HDB flats in Singapore. There was a debate on HDB affordability in the recent Parliament that convened in November. Mr Chia, Chief Analyst of PropertyForSale Pte Ltd, said that it is unlikely that the Government will force HDB flat owners to sell their flats if they buy a private property. However, he encouraged the Government to raise the property tax for HDB flat owners who rent out their entire flat and stay in a condo or landed property. 

New launch projects at Lentor Modern and Sky Eden Bedok boosted the figures for new private home sales in September according to URA report. Property developers sold a total of 987 units in Singapore for the month of September. This result is more than double from 438 units in August. GuocoLand sold 512 units of Lentor Modern and Frasers Property sold 121 units of Sky Eden@Bedok at the project launches. This is the highest number of sales since May, when developers sold 1,355 units. The sales count exclude executive condominiums (ECs). Foreigners took up 4.8 per cent of these new private home sales in September, a significant reduction from 12.7 per cent a month earlier. It goes to show that foreign property investors do not fancy Outside Central Region (OCR) projects.  New home sales for October is likely to be dismal as property buyers feel the pinch of interest rates exceeding 3 per cent per annum. There are two CCR new launch projects in the pipeline, Hill House and Sophia Regency.   Kovan Jewel in the OCR may also be launched for sale in November. Two EC projects will be launched by the end of the year. They are Copen Grand in Tengah and Tenet in Tampines. Buying a new launch project that is under construction will be disadvantageous if you do not have a roof over your head. The sky high rental price is making buyers to reconsider their property purchase. 

Maybank is offering the highest rate at 3 per cent per annum for a 1-year fixed deposit tenure. For similar 12 months fixed deposit tenure, Singapore banks OCBC and UOB range from 2.65 per cent to 2.9 per cent. According to data from the Monetary Authority of Singapore (MAS), these fixed deposit (FD) rates are the highest in almost 24 years. The last time interest rates on 12-month deposits exceed 3 per cent was in November 1998. For a longer tenure of 24 months fixed deposit, RHB is offering the highest at 3.2 per cent interest rate. Beyond 12 months, promotional rates for a 15-month duration are going at 3 per cent and 3.05 per cent at UOB and Maybank, respectively.  For a short term fixed deposit of 6 months, Maybank has the highest interest rate at 2.8 per cent.  Most banks will review their promotional fixed deposit rate on a monthly basis as US Federal reserve persists on rate hike to counter inflation. Singapore banks recently revised its home loans fixed rate package to 3.5 per cent or even higher.  In the last few years when interest rate was extremely low, banks were lending out at low rates so it has affected fixed deposits rate adversely. As the volatility in the global stock markets increases, there is no better place to put your funds for a guaranteed returns.  In the event a Deposit Insurance (DI) Scheme member bank or finance company fails, all of your insured deposits with that member are aggregated and insured up to S$75,000 by the Singapore Deposit Insurance Corporation Limited (SDIC). There is an early withdrawal penalty if you terminate your fixed deposit before maturity date. As a result, you will earn only prorated interest rate based on your tenor.

Singapore banks DBS, OCBC and UOB have raised their home loans fixed rate package to 3.5 per cent after US Federal Reserve raised benchmark interest rates by another three-quarters of a percentage point in September. The Federal Reserve officials signaled the intention of continuing to hike until the funds level hits 4.6% in 2023 as the FOMC is determined to bring inflation down to 2%. The latest rate adjustments mean that Singapore banks mortgage rates are now at their highest since year 2008. DBS is raising its rates from the earlier 2.75 per cent to 3.5 per cent. This is a 0.75 percentage point increase by Singapore’s largest bank.  Borrowers of DBS home loans can opt for fixed rate ranging from two to five years lock-in period.  DBS bank also introduced a new home loan package last week to allow new and existing HDB flat owners earning less than S$2,500 a month to take up a mortgage loan with POSB at only 2.6 per cent per annum. UOB announced that its latest two-year and three-year fixed rate home loan packages are 3.75 per cent and 3.85 per cent, respectively. OCBC two-year fixed rate has been revised from 2.98 per cent to 3.5 per cent. For customers whom are confident that interest rates will not spiral out of control, they may opt for UOB one-year fixed rate package at 3.35 per cent which is the lowest on the market right now.  It will also appeal to those homeowners who are planning to sell their residential property next year.  Most banks will impose an full redemption fee if the house is sold within the lock-in period.  All the three local banks have left their floating rate offerings pegged to the benchmark Singapore Overnight Rate Average (SORA) intact. DBS floating rate loan remains at 3-month SORA and a spread of 1 per cent per annum, with a two-year lock in period. UOB is offering a floating rate of 3-month SORA plus a margin of 0.7 per cent per annum for the first two years, and 0.8 per cent for the third year onwards. Buying sentiment in the property market is expected to weaken towards the end of the year with the rising interest rate environment, said Chia, Managing Director at Propertyforsale Pte Ltd. “We advise homeowners to contact us as early as possible to better understand how changes in interest rates will affect their home loans and we can direct them to refinancing or repricing their mortgage loan early to reap the savings and mitigate risks,” said Mr Chia. Last week, Singapore Government implemented new property cooling measures to moderate HDB buying demand and tighten borrowing limits. 

New property cooling measures has been introduced on the final day of September 2022 to suppress the rising HDB resale flats prices. 15-month wait-out period To keep resale HDB flats affordable, the Singapore Government will impose a 15-month wait-out period for private residential home owners before they can purchase a non-subsidised HDB resale flat. This will kick in after they have sold their private property such as condominium or landed house. However, the wait-out period will not apply to elderly folks aged 55 and above who are downsizing from their private residential property to a four-room or smaller resale flat. The 30 months wait-out period for private home owners who are first-timers and wish to apply for the Central Provident Fund (CPF) Housing Grant and Enhanced CPF Housing Grant for their resale flat remains unchanged. Previously, these property owners were allowed to buy a HDB resale flat on the open market, as long as they sell their private properties within six months of the purchase. Loan to value (LTV) limit reduced to 80% The second cooling measure is to lower the loan-to-value limit for HDB loans from 85 per cent to 80 per cent. The lower LTV limit will apply to new flat applications for sales exercises launched and complete resale applications which are received by HDB on or after 30 September 2022. This reduces the maximum amount potential home owners can borrow from HDB. For HDB buyers who are taking bank loans, the LTV limit remain at 75 per cent. Considering that the housing loan interest rates have risen significantly and they are poised to rise further next year, the Government's intention is to encourage Singaporeans to be prudent in buying a home and avoid future difficulties in servicing home loans. Assume higher interest rates when assessing borrowers' repayment ability For home loans granted by banks and financial institutions, MAS will raise by 0.5%-point the medium-term interest rate floor used to compute the Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR). For HDB housing loans, HDB will introduce an interest rate floor of 3% for computing the eligible loan amount. There will be no impact to existing HLE applications received by HDB before 30 September 2022. Key takeaways from the latest cooling measures in 2022 “The pool of HDB buyers for EM, EA and 5-room flats will be greatly reduced. Ultimately, our Government want to see lesser million dollar flats.”, said Mr Chia, Managing Director, Propertyforsale Private Limited. “Private sellers whom want to sell and downsize to affected HDB flats may postpone their plans to sell their private property.”, said Mr Chia. Last but not least, our Government want to redirect en-bloc owners to buy private properties and not to disrupt the public housing pricing index.