SINGAPORE: According to a real estate expert, the Singapore government’s new property cooling measures may not achieve the intended cooling effect.
The recent changes, including lowering the Loan-to-Value (LTV) ratio for HDB loans to 75%, are expected to only temporarily slow demand for flats. Lee Sze Teck, Senior Director for Data Analytics at Huttons, expressed concerns about these measures.
He noted that while the demand for resale flats might drop as buyers adjust to the changes, this slowdown is expected to be short-lived. “Demand will return, and prices will continue to rise over time,” he said.
According to the Singapore Business Review, Mr Lee said that one factor is the number of flats reaching their Minimum Occupation Period (MOP).
“In 2025, an estimated 7,000 flats will reach their MOP. This is even lower than 2024’s estimated 12,000 flats, fulfilling the minimum occupation period (MOP). HDB resale prices may continue to rise in 2025,” he said.
“The changes may not achieve the intended cooling effect on the HDB resale market,” he added.
According to Mr Lee, the private residential market, Build-to-Order (BTO) flats, and executive condominiums (ECs) will likely be unaffected. He added, “There is likely no impact on the 4-room and larger flats market, and these owners tend to make up the bulk of HDB upgraders.”
In the private market, transactions are less dependent on government loans, meaning the new property cooling measures will have minimal impact.
He noted that the EC market, which often attracts HDB upgraders, will also unlikely be affected. “HDB upgraders do not need to sell their flat when they purchase a new EC,” he noted.
The BTO market, which operates on a deferred payment scheme, is also shielded from the immediate effects of the new property cooling measures.
Mr Lee said that the deferred payment plan helps cover any financial gaps for BTO flats. By the time buyers receive their keys, any shortfall is taken care of.
HDB million-dollar flats will also not be affected by the new measures, Mr Lee said. He added that buyers of these flats usually use bank loans and do not qualify for grants.
He explained that buyers of million-dollar HDB flats often do not borrow up to 75% of the purchase price or valuation. Some buyers do not use a loan at all.
In the HDB resale market, Mr Lee noted that the new measures may actually drive up prices for 2-room and 3-room flats.
He does not expect the measures to affect 4-room and larger flats because most buyers of these units do not benefit from grant increases and typically use bank loans.
However, he added that the limited supply of newly MOP 4-room and 5-room flats may lead to higher prices for these larger units. /TISG
Featured image by Depositphotos