Fourth round of cooling measures... In yet another surprise move last evening, the government announced another round of property cooling measures - the fourth in two years. With effect from 14 Jan 2011, the holding period for Seller's Stamp Duty (SSD) will be increased from three to four years. In addition, the SSD rates will go up to 16%, 12%, 8% and 4% for residential properties sold in the first, second, third and fourth year of purchase respectively. Finally, the Loan-to-Value (LTV) limit will be lowered to 50% for housing loans to purchasers who are not individuals and 60% to individuals with one or more housing loans.
... will hit marginal buyer. These demand-side measures will affect marginal buyers who already have a housing loan and speculators. In particular, we feel the significant increase in SSD rates is a strong indication of the government's determination to curtail property speculation. The government also stated that there is an ample supply of private residential property in the pipeline, a move to guard against unsustainable property prices when interest rates eventually rise.
Developer share prices to dip and recover. We observe from the last three cooling episodes that it is possible for developers' share prices to decline 2-5% in the short-term. However, in all three episodes, the broad developer index (FSTREH) recovered to original levels after one month.
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