Singapore eases rules on property financing

Amid growing regional competition, the city-state moves to draw investment and lift stagnant prices

Singapore has relaxed its rules on property financing and foreign ownership in a move to attract investment and boost stagnant prices amid rising regional competition.

The Lion City yesterday raised its loan-to-value ratio, or the maximum mortgage a residential homebuyer can borrow from a bank, to 90 per cent from 80 per cent. It also decided that half of the 10 per cent deposit could be paid using funds from the state-run pension system, with the other half in cash.

In a bid to lure overseas investors, the government halved the S$2 million ($9.2 million) minimum requirement for foreigners to invest in residential properties in order to become a Singapore permanent resident.

It will also allow foreigners to buy apartments in non-condominium developments of less than six storeys. However, they will still need special approval to buy landed properties - individual houses.

Analysts said the new measures would raise Singapore's competitiveness, but they were sceptical about whether the measures could revive property prices, which have been languishing 36 per cent below their peak in 1996.

'There will definitely be a boost to the property market by bringing in some marginal buyers who previously could not afford the 20 per cent down payment,' said Jeremy Choy, manager of DTZ Debenham Tie Leung's research department in Singapore.