Singapore added more measures to curb speculation on residential and industrial properties after home prices climbed to a record and the value of logistics buildings doubled over the past three years.

The stamp duty for homebuyers will increase today by between 5 percentage points and 7 percentage points, the government said in an e-mailed statement yesterday. Permanent residents will have to pay the additional tax when they buy their first home, while Singaporeans will have the levy starting with their second purchase, according to the notice.

This follows government efforts since 2009 to rein in residential property prices. Those steps have included barring interest-only loans for some housing projects and not allowing developers to absorb interest payments. The new rules may limit gains for the stocks of Singapore’s developers, the best performers on the benchmark Straits Times Index last year.

“We foresee a substantial impact on the industrial segment and expect residential to moderate further,” said Priyaranjan Kumar, the Singapore-based regional director of capital markets at Cushman & Wakefield, a property consulting company. “The additional measures are prudent to keep the property market aligned to macro fundamentals.”

The government will also tighten the loan-to-value limits for buyers seeking a second mortgage, it said yesterday, referring to the amount they are allowed to borrow relative to the value of their properties. The cash down payment will also rise to 25 percent from 10 percent starting from the second loan, it said.

Executive Condominiums
Singapore will also cap bank loan repayments for public housing to 30 percent of the buyer’s monthly income, and restrict permanent residents from subletting their entire units, it said.
The size of executive condominiums will be limited to 160 square meters (1,720 square feet), the government said. These apartments are built by private developers and come with income limits and other restrictions.

For industrial buildings, the government will introduce a stamp duty for sellers, starting at 15 percent if the property is sold within a year, it said.

“The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market,” Tharman Shanmugaratnam, Singapore’s deputy prime minister, said in the statement yesterday. “We have to take this further round of measures now to check recent market trends and avoid a more serious correction in prices further down the road.”

Earlier Restrictions
Earlier steps taken by Singapore to ease the property market included imposing additional taxes on foreigners and companies buying properties, and moving to curb the trend of so- called shoebox apartments. In October, it restricted home-loan maturities to 35 years and required tighter loan-to-value limits for loans exceeding 30 years.

In September, Singapore said it would cap the number of homes that can be developed in suburban projects to curb the increasing trend of building shoebox apartments, or units smaller than 50 square meters.

The island city-state in December 2011 imposed an additional 10% stamp duty on foreigners and corporate entities. The levy is 3% for permanent residents purchasing a second home and for citizens buying their third residence. The government earlier required a 1% duty on the first $180,000 of the price, 2 percent on the next $180,000 and 3% for the remainder.

Best Performers
Last year, six of the top 10 gainers on the Straits Times Index were real estate-related companies, led by CapitaLand, Southeast Asia’s biggest developer, and its retail property unit CapitaMalls Asia. The benchmark’s property index, which tracks 40 builders, gained 48 percent last year, its best performance since 2009.

CapitaLand shares on Friday fell 1.3% to $3.89 while City Developments, Singapore’s second-largest developer, slid 0.3% to $12.60.

Singapore home prices climbed to a record in the fourth quarter after developers sold more homes. The private residential property index rose 1.8% to 211.90 points, according to preliminary estimates released by the Urban Redevelopment Authority on Jan. 2.

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