HDB resale market may emerge big winner from the changes.
Young couples with high incomes and those looking to offload their Housing Board flats in the resale market are likely to be the biggest beneficiaries of the new HDB policies announced yesterday, said observers. And the resale market itself could get a lift with new incentives being extended to buyers, they added.
Yesterday, National Development Minister Lawrence Wong announced, among other things, that the income ceiling to buy HDB flats and executive condominiums (ECs) has been raised by $2,000, to $14,000 and $16,000, respectively.
ERA Realty key executive officer Eugene Lim said it is increasingly common for some fresh graduates to start with higher salaries, such as those in IT and finance. "Couples in those sectors would hit the income ceiling quite early, so they might be priced out of the Build-To-Order market," he said, adding that the changes give such young people more choice.
"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."
Another major change is the new Enhanced CPF Housing Grant of up to $80,000. It 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 yesterday, Mr Wong said 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.
OrangeTee & Tie's head of research and consultancy Christine Sun said the change was timely, 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 each of the next few years.
Without the change, sellers might see prices of their flats go down. "But with more grants, some buyers will seriously consider resale flats, and this should help to absorb the supply," she said, adding that the latest moves will complement changes in May to let home buyers use more Central Provident Fund savings and get bigger loans to buy ageing HDB flats.
PropNex chief executive officer Ismail Gafoor said existing home owners may get to fulfil their upgrading dream once they sell their flats. Instead of one in four people buying resale flats, he expects the grants to increase the ratio to one in three.
"And once these owners sell their flats, they are likely to buy a private condo, so the whole property cycle benefits," said Mr Ismail.
Mr Louis Ng, MP for Nee Soon GRC, said the enhanced grant is a win-win for both buyers and sellers, adding: "The people who are trying to sell can sell, and the people who need a flat urgently can better afford it."
Other people who would benefit from the changes are those who are interested in ECs. Mr Ismail said: "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 %."
"I would expect a number of people at the Piermont Grand showroom this weekend," he added, referring to the 820-unit Punggol EC - the sole EC launch of the year - which has only crossed the 50 % sales mark.
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. Overall, analysts see the changes as a major boon for both buyers and sellers.
As ERA's Mr Lim put it: "I guess elections are coming, right?"
KEY HOUSING POLICY CHANGES SINCE 2015
• Income ceilings for new and resale flats raised from $10,000 to $12,000 for families and from $5,000 to $6,000 for singles.
• Proximity Housing Grant (PHG) of up to $20,000 introduced.
• Fresh Start Housing Scheme for families in public rental flats launched.
• PHG raised to up to $30,000; proximity condition revised from 2km to 4km, and singles who buy flats to live near their parents are included.
• Deferred income assessment for grant applications takes effect.
• Prime Minister Lee Hsien Loong announces expanded Home Improvement Programme and Voluntary Early Redevelopment Scheme.
• First batch of Build-to-Order flats with shorter waiting time launched.
• Shorter waiting times for applicants to receive ballot results implemented.
• New projects announced six months ahead instead of three.
• Larger HDB loans and relaxed rules on Central Provident Fund (CPF) usage for older flats implemented.
• Step-Up CPF Housing Grant and enhancements to Fresh Start Housing Scheme introduced for lower-income families.
Adapted From The Straits Times, Sep 11 2019