20-8-2024 (SINGAPORE) In a strategic move to stabilise the public housing market and enhance affordability for first-time homeowners, the Singapore government has announced a comprehensive set of measures targeting the Housing and Development Board (HDB) resale sector. The announcement, made jointly by the Ministry of National Development (MND) and HDB on 19 August, outlines significant changes to loan policies and grant structures, set to take effect from 20 August 2024.
At the heart of these reforms is a reduction in the Loan-to-Value (LTV) limit for HDB loans, which will decrease from 80% to 75%. This adjustment aligns HDB loan terms with those offered by financial institutions, promoting a more unified lending landscape. The move comes as part of the government’s ongoing efforts to encourage prudent borrowing and mitigate potential risks associated with over-leveraging in the property market.
Complementing the LTV adjustment, the government has announced a substantial increase in the Enhanced CPF Housing Grant (EHG) quantum. This boost in financial support targets both new and resale flat buyers, with a particular focus on assisting lower-to-middle income first-time homeowners. Under the new scheme, eligible first-timer families could receive up to S$120,000 in grants, a significant increase from the previous cap of S$80,000. Similarly, first-timer singles will see their maximum grant amount rise from S$40,000 to S$60,000.
These measures come in response to the persistent strong demand in the HDB resale market, which has seen prices climb by over 4% in the first half of 2024 alone. The government attributes this surge to robust demand coupled with a temporary supply constraint, as fewer flats reached their Minimum Occupation Period (MOP) during this time.
Prime Minister Lawrence Wong, in his National Day Rally 2024 address, emphasised the government’s commitment to maintaining housing affordability. The enhanced EHG scheme is a direct outcome of this pledge, designed to provide tangible support to those entering the property market for the first time.
The October 2024 Build-To-Order (BTO) exercise will showcase the practical implementation of these new policies. HDB plans to offer 8,500 flats across 15 projects, incorporating the new flat classification system and additional subsidies for Plus and Prime categories. This forms part of a broader initiative to introduce 100,000 new flats between 2021 and 2025, with 19,600 BTO flats slated for 2024 alone.
Despite concerns over rising prices, the government maintains that resale flats remain within reach for most buyers. Data from 2023 indicates that 80% of first-timer families who acquired resale flats were able to service their HDB housing loans using 25% or less of their monthly household income, often relying solely on their CPF contributions.
While acknowledging the existence of high-priced resale transactions, officials stress that these represent only a small fraction of overall sales. Nevertheless, the government remains vigilant, committed to monitoring market trends closely and implementing further policy adjustments if necessary to ensure the long-term stability and sustainability of Singapore’s public housing sector.
