Singapore eases property curbs after housing prices decline

Singapore is rolling back some propertymarket curbs after a three-year decline in prices made homes more affordable in the city state.

Shares of property developers surged after the surprise announcement by the government Friday that stamp duty imposed on sellers will be reduced and some mortgage restrictions eased. City Developments Ltd. jumped as much as 10 percent and CapitaLand Ltd. climbed to the highest in almost two years.

“Singapore’s property market had been quite weak for a period, this is more reactionary for the Singaporean government to prop up the market,” said James Soutter, a portfolio manager at K2 Asset Management Ltd. in Melbourne.

Sellers’ stamp duty, currently payable on residential properties sold with four years of being purchased, will now only apply for three years, the government said. The rate of duty will also be lowered, to 4 percent for properties sold in the third year, to a maximum of 12 percent for dwellings sold within one year.

The move is the first relaxation of a raft of measures to cool home prices the government started to roll out in 2009, with some of the strictest restrictions imposed in 2013. Home prices fell 3 percent last year, and have declined for 13 quarters in a row -- the longest since the data was first published in 1975.

Developers weren’t anticipating the move. CapitaLand Chief Executive Officer Lim Ming Yan last month said property curbs are set to stay in place for at least another year amid signs the city’s housing market is stabilizing, while City Developments’ billionaire Chairman Kwek Leng Beng said the worst isn’t over in Singapore’s property market but the pace of decline had slowed.

Rules surrounding the debt-servicing ratio for some mortgages will also be eased after some borrowers, particularly retirees, said the rules limited their flexibility. The changes take effect March 11. (Bloomberg)