7th Property Cooling Measures

Here are some key points:

• ABSD has increased all round.7% ABSD for Singaporean buying 2nd or 3rd Property.
• PRs are affected the most - ABSD extended to PRs, PRs not allowed to sublet whole HDB flat, etc. If you are PR, do find out more how this affects you.
• Loan-to-valuation (LTV) limit lowered for 2nd housing loan to 50% for a loan tenure under 30 years (OUCH)
• Minimum cash down payment for individuals taking 2nd loan will be raised from 10% to 25% (OUCH OUCH!)
• New ABSD and loan rules are temporary and will be reviewed depending on market conditions 
• First-time home owners are spared
• Mortgage Servicing Ratio (MSR) for HDB - i.e. the maximum percentage of your income that is supposed to service the home loan - will be lowered. It will now be a bit harder to get a loan to buy a HDB flat.
• Executive Condominium (EC) unit's floor area now capped at 160sqm (or around 1,700 sqft)
• Dual-key units restricted to multi-generational families only
• Developers only allowed to launch ECs 15 months from the date of award of the site
• Private enclosed spaces and roof terraces will be considered part of the gross floor area and will now be subject to development charges. These also apply to normal condo developments (we can hear the groans coming from developers)
• Industrial properties are now subject to Seller's stamp duty

Opinion

Although, I have being expecting measure to come, that's why I have some reserve about holding property counters. Luckily I cut loss on Kepl and Wheelock on Friday before this Friday's evening annoucement.

This is a hard measure. 

Prediction

Although I hate to predict, My feeling is that property prices are not going to go up at least till 2015. 2013-4 will see an influx of many units. I think we may see a 5-10% drop in property prices. You can't invest now on property due to garment's cramping down. Paradoxically, I think rental may hold up or even go up as it is increasing difficult for foreigners to buy property in Singapore.

So property investment is a no-no at the 2-3 years horizon, where is money going to go? US & Euro has problems that can't be solved, the central banks only know how to print money. Printing money means  ultra-inflation and  hot money have to come in to Asia and emerging markets. If money can't goes to bank or property, I think likely they will go to some other investment instruments. Strange right, STI goes up 20% last year despite US and Euro woes. As money becomes smaller, Stock's value had to readjust to reflect the new value. These 2 years, I would put my bet on the stock market.