National Development Minister Lawrence Wong recently announced that the income ceiling for purchasing HDB flats and executive condominiums (ECs) has been raised by S$2,000, to S$14,000 and S$16,000, respectively.
Observers commented that the biggest beneficiaries of these new HDB policies would be young couples earning high incomes and those looking to sell their Housing Board flats in the resale market.
“For those who don’t want to spend too much on their first home, it is great. Getting your first HDB flat is a bit like national service for the guys – it is a Singaporean rite of passage,” ERA Realty key executive officer Eugene Lim said.
Fresh graduates who start with higher salaries, such as those in IT and finance would also directly benefit. “Couples in those sectors would hit the income ceiling quite early, so they might be priced out of the Build-To-Order market,” adding that these policies give young people more options.
In his speech, Mr Wong remarked that adjusting the grant structure might make resale flats more attractive and, in turn, help the authorities meet the demand for homes.
He noted that the previous incentives for Build-To-Order flats may have been a factor in why three in four, or 75% of first-timer families bought new flats instead of resale homes last year.
The new policies and changes were timely according to OrangeTee & Tie’s head of research and consultancy Christine Sun, given that a large number of flats – about 25,000 a year – are expected to reach their minimum occupation period and go on the resale market in the next few years.
“And once these owners sell their flats, they are likely to buy a private condo, so the whole property cycle benefits,” said PropNex chief executive officer Ismail Gafoor, according to him, existing home owners may get to fulfill their upgrading dream once they sell their flats.
“The people who are trying to sell can sell, and the people who need a flat urgently can better afford it,” said Mr Louis Ng, MP for Nee Soon GRC, and viewed the enhanced grant as a win-win scenario for both buyers and sellers.
Those interested in ECs would also benefit from the changes.
“The increase of $2,000 will not only allow more people to qualify, but also allow them to get approximately an additional $120,000 of loan amount based on the current mortgage servicing ratio capped at 30 per cent,” M. Ismael said.
In the medium term, Huttons Asia research director Lee Sze Teck said the grant changes would ease the burden of owning a home for young couples. “Hopefully, it will help nudge families to have more kids,” he added.-/TISG
Send in your scoop to email@example.com