The exemption of stamp duty beyond
the HOC / reduction of stamp duty
rates may further spur activity in the
secondary property. Unlike the RPGT
exemption which benefit the seller
/ vendor, stamp duty exemption /
reduction in stamp duty rates may
motivate potential buyers as it reduces
the cost of property acquisition.
What are the challenges for people to
buy at the secondary market? What are
the solutions to these challenges?
Challenges when purchasing properties
in the secondary market include
difficulty in obtaining loan approval /
loan amount (the difference between
down payment and the balance property
price), mismatch in price expectation
between vendor and purchaser, etc.
Securing loan has been one of the major
challenges when purchasing property
in the primary or secondary market.
The loan approved to loan applied ratio
for the purchase of residential property
has been on the downtrend since 2015;
hovering between 41.3% and 48.4%.
During the first four- month of 2020,
the loan approved to applied ratio fell
below 40% mark to record at 38.3%.
Another challenge is the mismatch in
price expectation between vendor and
purchaser. Purchasers may compare
the current asking prices to historical
transactions within the locality while
vendors may expect higher selling
prices attributed to investments made
to improve the properties (renovations
– built-ins, fittings, extensions etc.) /
capital appreciation. No two properties
are alike, and therefore, there is no
apple to apple comparison.
Historical transactions only provide a
guide to both vendor and purchaser.
Many factors determine the value
of a property including location /
orientation, building layout, land size
/ built-up areas, level of maintenance,
improvements, etc. Negative factors
that may affect property values include
proximity to sewerage pond / TNB substation
/ cemetery, T-junction, floodprone
area, etc.
Both vendor and purchase may engage
an independent professional Valuer to
determine the property value.
To help overcome the challenges,
innovative financing packages from
financial institutions support home
buyers – especially for first-time
homebuyers, often these people are
younger and have just started work
and therefore may have less savings /
reserves for down payment etc.
Innovative financing should take
into account their potential career
progressions – moving forward, with
higher salaries these borrowers will
be able to afford higher monthly
instalments. For example, a step-up
instalment plan.
Hefty down payment for the purchase
of properties at the secondary market
can deter buyers from entering the
secondary market. Any suggestion/
advice on the agreements sellers and
buyers can make pertaining to the down
payment?
• Down payment may be one of the
issues faced by potential homebuyers.
They should be able
to obtain a pre-loan assessment prior to
making the deposit payment. Pre-loan
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