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What are Property Cooling Measures?
In Singapore, the government keeps a close watch on the property market to ensure homes remain affordable and sustainable. To achieve this, a series of regulations called cooling measures are introduced.
Why Cooling Measures Exist
Without regulation, property prices can rise too fast, leading to speculation and financial risks. Cooling measures protect buyers from over-borrowing and reduce the chances of a property bubble.
Common Cooling Measures
- Additional Buyer’s Stamp Duty (ABSD): A tax on property purchases. For example, Singaporeans buying their second home must pay 20% ABSD on top of the price. Foreigners pay even higher.
- Loan-To-Value (LTV) Ratio: The maximum percentage banks can lend you. For your first home, it’s up to 75%. For subsequent properties, the limit is lower.
- Total Debt Servicing Ratio (TDSR): Ensures your monthly loan repayments don’t exceed 55% of your monthly income.
- Seller’s Stamp Duty (SSD): If you sell your property within 3 years, you pay an extra tax to discourage “flipping.”
Effect on Buyers
While some may feel cooling measures make it harder to invest, they actually create a more stable property market. For genuine homebuyers, this means less competition from speculators.
Key Takeaway
Cooling measures are not obstacles, but safeguards to ensure you buy within your means and protect your long-term wealth.
