People with higher incomes will be able to buy Housing and Development (HDB) flats now that the HDB income ceiling has been raised.
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 said the biggest beneficiaries of the raised HDB income ceiling would be young couples earning high incomes.
The higher HDB income ceiling is also expected to benefit those looking to sell their Housing Board flats on the resale market, for there may be more potential buyers.
“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 benefit.
The Enhanced CPF Housing Grant of up to S$80,000 replaces two previous grants but allows more people to benefit as it has a higher income cap and does not impose any restrictions on the flat size or location.
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 might have been a reason 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 homeowners may get to fulfil 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, who 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