The business is so great that government has turned cautious on the sustenance of the current phenomena.With the local economy continues to work itself out of the shadow of financial downturn and H1N1 flu, the Singapore property market has been doing brisk business.Past two years has seen a flurry of buying activities and bullish developers have been assaulting our senses with their incessant advertisements on a daily basis, all hawking for our attention on their properties.
There is no doubt that the experience of the mid-nineties 'boom and bust cycle is still fresh in the administration' s mind. To move with our experience, that the government is ready all the stops to ensure it would not be repeated in the near future.
Among them are land supply decision, money supply tightening and tax policies. We are about to tell you how this individual measure works and how effective it can put the overheated market under control. There are actually a few tools at Singapore government's disposal to better handle any similar incident.
As a result, speculation of newly built property would cut down drastically.Land Supply Decision - Government is the biggest land owner in this island and when they do decide to cut down land supply for development, it will have a direct impact on the property market. Developers would have nowhere to turn to for the building of their luxury properties and correspondingly minimize the new launches.
Credit Tightening - A popular rumor is making rounds in the property sector that a comprehensive review of the credit market is underway. The maximum allowed loan quantum is 90 percent of property value. When government does decide to bring this down to 80 percent, or even lower, the whole market would be hit hard.
Government introduced capital gains tax at the height of nineties property boom but has since abolished it. Capital Gains Tax - This is a tax derived from the profit obtained from the sales of property. When this taxation is applied, it will treat profit as income and subject to the prevailing tax rate at either individual or corporate level.If this is brought back into the fray, it is expected demand would be slowed down significantly and will be effective to discourage speculation as profit would be reduced.
Property Tax - Another effective way to deal with an overheating market is to raise the property tax. Again based on reduced profit psychology, speculative activities could be significantly reduced due to the perceived small profit.
Double Stamp Duty - A legislative change may necessitate that both buyer and seller pay stamp duty. When it is implemented both ways, it is hoped that sellers/speculators would be more reluctant to freely sell/trade a piece of property.Currently stamp duty applies to buyer only.
These are just some of the measures that can give the government in its efforts to the real estate market under control. But it is still too early to say whether the existing ownership interest is real, and thus sustainable, or if another bubble in real decision-making. - 23309
There is no doubt that the experience of the mid-nineties 'boom and bust cycle is still fresh in the administration' s mind. To move with our experience, that the government is ready all the stops to ensure it would not be repeated in the near future.
Among them are land supply decision, money supply tightening and tax policies. We are about to tell you how this individual measure works and how effective it can put the overheated market under control. There are actually a few tools at Singapore government's disposal to better handle any similar incident.
As a result, speculation of newly built property would cut down drastically.Land Supply Decision - Government is the biggest land owner in this island and when they do decide to cut down land supply for development, it will have a direct impact on the property market. Developers would have nowhere to turn to for the building of their luxury properties and correspondingly minimize the new launches.
Credit Tightening - A popular rumor is making rounds in the property sector that a comprehensive review of the credit market is underway. The maximum allowed loan quantum is 90 percent of property value. When government does decide to bring this down to 80 percent, or even lower, the whole market would be hit hard.
Government introduced capital gains tax at the height of nineties property boom but has since abolished it. Capital Gains Tax - This is a tax derived from the profit obtained from the sales of property. When this taxation is applied, it will treat profit as income and subject to the prevailing tax rate at either individual or corporate level.If this is brought back into the fray, it is expected demand would be slowed down significantly and will be effective to discourage speculation as profit would be reduced.
Property Tax - Another effective way to deal with an overheating market is to raise the property tax. Again based on reduced profit psychology, speculative activities could be significantly reduced due to the perceived small profit.
Double Stamp Duty - A legislative change may necessitate that both buyer and seller pay stamp duty. When it is implemented both ways, it is hoped that sellers/speculators would be more reluctant to freely sell/trade a piece of property.Currently stamp duty applies to buyer only.
These are just some of the measures that can give the government in its efforts to the real estate market under control. But it is still too early to say whether the existing ownership interest is real, and thus sustainable, or if another bubble in real decision-making. - 23309
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