Some property analysts expect a modest boost in home sales here after the change in the seller's stamp duty (SSD) rules that take effect today.
For properties purchased from today, the rates are lower and apply only to sales within three years. That means someone who buys a property today pays only 12 per cent SSD if the property is sold within a year, 8 per cent if sold within two years and 4 per cent within three years.
A homebuyer who missed the date was not too disappointed as he intends to live in his home over the long term, but he would have liked the flexibility to upgrade or sell earlier without paying the stamp duty.
However, he said he was now more motivated to hunt for a good second property to invest in.
People like him may boost new home sales, but analysts think the impact will be muted.
The move gives positive vibes to the market as it gives the signal that the market is bottoming, which will attract more buyers.
ERA key executive officer Eugene Lim does not expect property prices to rise. "There is still abundant supply in the residential property market and the additional buyer's stamp duty rates and loan to value limits remain unchanged.
Analysts feel that the SSD tweak is targeted at those who may be finding it difficult to service their loan amid the slowing economy.
The SSD's intent was to prevent property speculation, but the additional buyer's stamp duty and total debt servicing framework are now much stronger deterrents against speculators compared with the SSD.
On the flip side, SSD can potentially hit home owners whose circumstances may change due to unforeseen events really hard, as they may have to sell their properties at a loss due to sluggish demand, and have to fork out SSD.
The SSD was applied to 550 deals in 2015, up from 519 in 2014. Most were not profitable, particularly among those with holding periods of less than three years.
Adapted from: The Straits Times, 11 March 2017