Embarking on the journey of purchasing your inaugural private property? Whether you're envisioning a new condo as your dream home or seeking to invest, taking the plunge into Singapore's dynamic private property market involves careful consideration. To guide you on this exciting venture, here's a curated list of four essential factors to ponder before delving into the realm of private property ownership.
Additional Buyer’s Stamp Duty (ABSD):
The recent surge in ABSD rates to 17%, following the 2021 property cooling measures, might seem daunting for first-time private homeowners. However, there's a silver lining: the ABSD amount is refundable upon the sale of your previous property within a 6-month window. A new regulation introduced in May 2022 closes a loophole, requiring an upfront payment of 35% ABSD when transferring residential property into a living trust, irrespective of the presence of an identifiable beneficial owner.
Loan-To-Value (LTV):
The LTV rates have witnessed a reduction from 80% to 75%, especially impactful for first-time home buyers or those with a settled existing home loan. This adjustment means a higher down payment, payable through cash or CPF, and limits the amount that can be borrowed from the bank to finance the home.
Total Debt Servicing Ratio (TDSR):
Introduced to safeguard home buyers from overcommitting to mortgages, TDSR caps the allocation of monthly income to loan payments at 55%. It ensures a prudent approach to mortgage affordability.
Property Tax:
The recent Singapore Budget announced revised property tax rates for both owner-occupied and non-owner-occupied residential properties, implemented in two steps from 2023. For owner-occupied homes with an annual value exceeding $30,000, rates will increase from 5-23% in 2023 to 6-32% in 2024. Non-owner-occupied homes, including investment properties, will see tax hikes from 10-20% to 11-27% in 2023 and 12-36% in 2024. This change is part of a broader effort to align property tax rates with market conditions.
Despite these measures aiming to cool the private property market, experts foresee a lively buyer's market, driven by sustained demand for recent launches like Affinity at Serangoon. The private property sector continues to attract attention, offering potential opportunities for those navigating the evolving landscape.