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Monday, 14 September 2009

Singapore: Stricter housing loan rules

THE Government has stepped in to temper exuberance in the property market and preempt speculative bubble from forming.

With immediate effect, it will make it tougher for home buyers to borrow by disallowing interest absorption scheme and interest-only loans to prevent excessive speculation, National Development Minister Mah Bow Tan announced in Parliament on Monday.

This means that banks and developers will not be allowed to offer housing loans whereby the borrower only pays the interest and defers repayment of the principal to a later date.

Mr Mah also announced that the Government will reinstate land sales through its confirmed list system and increase the supply of sites under the 'reserve list'.

Sale of state land under the confirmed list was suspended for the first half 2009 Government Land Sales (GLS) Programme to help stave off oversupply risk as the property market here was then on a downtrend.

Instead, state land was only made available under the 'reserve' list system for the first half of the year.

Under the reserve list system, the government releases a site for sale only if an interested party submits an application with a minimum price that is deemed acceptable.

By contrast, land parcels under the confirmed list will be tendered according to scheduled dates - which could translate to more residential property launches.

Mr Mah said speculation was trickling back into the property market and the measures were taken to prevent the overheating.

New home sales in Singapore have shot through the roof recently. Resale prices of many popular projects have also risen from the lows early this year.

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