In a strategic move to stabilize Singapore's public housing sector, the Ministry of National Development (MND) and Housing Development Board (HDB) unveiled a set of measures on the evening of August 19, 2024. These initiatives aim to cool the overheating HDB resale market while bolstering support for first-time homebuyers from lower-to-middle-income brackets.
At the heart of these changes is a revision to the loan-to-value (LTV) limit for HDB housing loans. Starting from midnight on August 20, the LTV ceiling will be reduced from 80% to 75%, aligning with the existing limit for loans from financial institutions. This adjustment will impact complete resale applications received by HDB from August 20 onwards and Build-to-Order (BTO) applications beginning with the October 2024 BTO exercise.
Despite this tightening of loan conditions, the government has taken steps to ensure that first-time buyers, particularly those from lower-income households, are not disproportionately affected. The increased housing grants announced by Prime Minister Lawrence Wong during the National Day Rally 2024 serve as a counterbalance to the LTV reduction.
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The Enhanced CPF Housing Grant (EHG), a means-tested support mechanism introduced in September 2019, will see significant increases. Eligible first-timer families can now receive up to $120,000, a substantial rise from the previous cap of $80,000. Similarly, eligible first-timer singles will benefit from an enhanced grant of up to $60,000, up from the former limit of $40,000.
These measures come in response to the persistent upward trajectory of HDB resale prices. While earlier cooling measures and increased BTO flat supply had successfully moderated price growth from 10.4% in 2022 to 4.9% in 2023, the first half of 2024 still witnessed a concerning 4% increase. This surge has been attributed to robust, widespread demand coupled with a tightening supply, as fewer flats reached their Minimum Occupation Period this year.
The government's announcement emphasized its commitment to closely monitoring the HDB resale market. The new measures are designed to achieve a delicate balance: cooling the market and promoting responsible borrowing while enhancing affordability for lower-to-middle income first-time buyers.
By implementing these changes, Singapore's housing authorities are demonstrating their adaptability in the face of evolving market conditions. The dual approach of tightening loan limits while boosting grants reflects a nuanced strategy to maintain stability in the public housing sector without compromising support for those most in need of assistance in achieving homeownership.
As these measures take effect, all eyes will be on the HDB resale market to gauge their impact on prices, demand, and overall market dynamics in the coming months.