In a recent government effort to stabilize the public housing resale market in Singapore, the Housing and Development Board (HDB) along with the Ministry of National Development (MND) announced a new set of cooling measures effective from August 20. These initiatives aim to manage rising housing prices and make homes more accessible to first-time buyers.
Under the new measures, the maximum loan-to-value (LTV) limit for HDB loans will be reduced from 80% to 75%. This change aligns the LTV limits of HDB loans with those provided by financial institutions, ensuring consistency across the board.
The latest adjustments mark the fourth round of property cooling actions initiated since December 2021. Previous adjustments had already seen the LTV limit decrease from 90% to 85% in 2021, and then to 80% in September 2022.
To mitigate the impact of these changes, particularly for lower-income and first-time home buyers, the government has increased the potential support through the Enhanced CPF Housing Grant. Previously capped at S$80,000, eligible first-timer families can now receive up to S$120,000. For eligible singles, the maximum grant has been raised by up to S$20,000 to S$60,000. The grant amounts vary based on household income without restrictions on flat type and location.
The latest enhancements to the grants were highlighted by Prime Minister Lawrence Wong in his National Day Rally speech, underscoring the government’s commitment to keep public housing affordable and within reach, especially for lower-income families. Since its introduction in September 2019, the Enhanced CPF Housing Grant has benefited approximately 72,300 first-timer households, distributing over S$2 billion. In the first half of this year alone, around S$204 million was disbursed to about 7,000 households.
The government continues to monitor the HDB resale market closely. Although there has been a notable slowdown from the 10.4% price growth in 2022 to 4.9% in 2023, the prices in the first half of this year rose by more than 4%, primarily due to strong demand and some supply constraints as fewer flats reached their Minimum Occupation Period.
Amid these changes, the eligibility for the revised Enhanced CPF Housing Grant will apply to new flat applications from the October 2024 BTO exercise, resale flat applications submitted from August 20, 2024, and those applying for an HDB Flat Eligibility letter from this date forward.
In their ongoing efforts to maintain housing affordability, the authorities emphasize the small percentage of HDB transactions that involve highly-priced resale flats, noting that the vast majority of first-timer families spend 25% or less of their monthly income on housing loans.
The government reassured that it remains dedicated to monitoring and adjusting policies as needed to foster a stable and sustainable property market for all Singaporeans.
