Govt assurance dampens speculation on capital gains tax
THE Government is not planning any fresh measures to cool the property market for now, National Development Minister Mah Bow Tan said yesterday.
GOOD NEWS: The announcement should bring relief to property market players, hit by uncertainty after the deferred payment scheme was scrapped. -- BT FILE PHOTO
His statement effectively hosed down speculation that a capital gains tax might be reintroduced to stop people flipping units for quick gains.
The news brought some relief to players in the property market, which has been hit by uncertainty after the scrapping of the deferred payment scheme two weeks ago.
The 10-year-old scheme, allowing people to buy property with a downpayment but no further payments until the completion of the project, was abolished to curb speculation.
Now, buyers have to make progressive payments while their homes are being built.
The change spooked developers, and was seen as the reason why there were only two bids when the tender for a residential site in Enggor Street in Tanjong Pagar closed on Nov 1.
That followed a sizzling 22.9 per cent growth in private home prices in the first nine months this year. Sub-sales, when uncompleted properties change hands, made up almost 22 per cent of total sales in central Singapore from July to September.
Addressing questions on the scrapping of the scheme in Parliament yesterday, Mr Mah said it was too early to ascertain its overall impact.
But he did not think genuine home buyers would be unduly affected because they could still get home loans from banks. Over time, the change will encourage the property market to grow in a 'more healthy and sustained manner', he said.
Responding to a question from MP Ho Geok Choo (West Coast GRC), he said the Government will closely monitor the market to ensure that prices are supported by economic fundamentals, and that there are sufficient private homes.
He said there is no need for any new measure, and that the Government is not considering any for the property market now. 'Our bias is really not to over-regulate or to interfere in the market if we don't have to,' he said.
If a capital gains tax - which was introduced in 1996 but lifted in 2001 - was imposed again, it would dampen foreign investor sentiment, said the director of research and consultancy at Colliers International, Ms Tay Huey Ying.
'This is good news for the market. It brings stability.'
Mr Mah stressed that there was no reason to panic over a perceived shortage of homes, as there was a stock of 65,000 private homes in the pipeline at the end of September this year.
About two-thirds are likely to be built and made available over the next three years.
Still, househunters such as bank executive Luanne Lim were disappointed at the Government's declaration. The 33-year-old bank executive, who feels private homes have become 'unaffordable', said: 'I think people can still afford to speculate without the deferred payment scheme.'
On the public housing front, Mr Mah said the Housing Board was ramping up its building programme to meet demand for new homes.
MP Cynthia Phua (Aljunied GRC) asked about the supply in the next three years, saying newly-weds found it harder to get new HDB flats.
But Mr Mah said about 4,000 flats will be launched under HDB's build-to-order programme this half year.
He did not think the HDB should meet all demand for new flats. If it did, it would be laying the groundwork for a future oversupply problem.
These same newly-weds would then find it hard to sell their homes if they wanted to upgrade. It was better to channel some of the demand for new flats to the resale market, he said.
MINIMAL INTERFERENCE
'Our bias is really not to over-regulate or to interfere in the market if we don't have to.'
NATIONAL DEVELOPMENT MINISTER MAH BOW TAN, saying there is no need for any fresh measures to cool the property market for now
WELCOME ANNOUNCEMENT
'This is good news for the market. It brings stability.'
MS TAY HUEY YING, director of research and consultancy at Colliers International, on the assurance that no new measures are in the pipeline
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