Bank loans for second homes will now be limited to a maximum of 70 per cent of the value of the property, down from 80 per cent previously, the National Development Ministry said. The government will also impose a tax on houses sold within three years of purchase, up from one year.
"The property market is currently very buoyant," the ministry said in a statement. "The government has decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers."
Prices of private residential housing rose to a record high in the second quarter, fuelled by a surging economy that expanded 18 per cent in the first half as manufacturing rebounded from last year's global recession.
Prices of public housing, where 80 per cent of Singaporeans live, have risen five straight quarters to record highs.
"The frothy sentiment has spread to the public housing market," said Wai Ho Leong, an analyst with Barclays Capital.
Leong said a surge in residential units planned and under construction will boost supply and help dampen prices.
Singapore's low crime rate, good schools and low personal and corporate taxes have helped the island rank near the top of expatriate global quality-of-life surveys and attracted investors to the residential and office property markets.
"Should economic growth falter and the market corrects, property buyers could face capital losses, with implications on their own finances and the economy as a whole," the ministry said. "The current low-global interest rate environment will not continue indefinitely."
The government earlier this year imposed a 1 per cent to 3 per cent tax on residential properties sold within one year of purchase and lowered the loan-to-value limit to 80 per cent from 90 per cent on loans for private housing. Officials have also pledged to release more government land for real estate development to help boost housing supply.
Private residential property prices rose 11 per cent in the first half, the ministry said.
"We've twice acted to cool the property market, once last year and once in February this year, but the prices are still rising," Prime Minister Lee Hsien Loong said in a speech on Sunday. "I think we need to do more."
"The latest measures are motivated largely by the unabated rise in public housing prices," an analyst said, noting the 4.1 per cent increase in HDB resale prices in the second quarter exceeded the average of about 3.0 per cent in preceding periods.
By AP
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