The additional measures announced Tuesday by the government to make public housing more affordable to Singaporeans has been well-received by property analysts.
Some notable changes include enhancements to the housing grants, new home loan rules and restrictions on newly-minted permanent residents (PRs) buying resale HDB flats.
Below are some views from Khalil Adis, Associate Research Director at Ascendant Assets, on the impact of the measures:
On shortening the maximum loan tenure to 25 years and the mortgage servicing ratio (MSR) limit to 30 percent of a borrower's gross monthly salary.
“I feel that this is a step in the right direction as it encourages financial prudence and borrowers won’t be overly leveraged. This is especially so in our current low interest rate environment which may fuel demand and cause prices and cash-over-valuations (COVs) of HDB resale flats to spike further. HDB’s resale price index for the second quarter showed that the index is now at a record high of 206.6 points. It is worth noting that it is showing signs of cooling as the index grew 0.5 percent compared to 1.3 percent in the first quarter. The new measure also goes to show that the government is committed to ensure property prices remain sustainable and within reach of first-time homeowners. Already we can see resale flats with zero or little COV which shows some signs of cooling have effectively taken place. This next step will hopefully prevent any further spikes.”
On PRs having to wait three years after receiving their PR status to buy resale flats.
“This shows that the government is genuinely listening to the feedback from citizens as many felt that PRs were responsible for driving up COVs and resale prices. I see this as part of the government’s efforts to sharpen the distinction between the needs of Singapore citizens and PRs, so that locals will not be unfairly squeezed out from the resale market. This again is a step in the right direction.”
The extension of the Special CPF Housing Grant (SHG) and the new Step-Up CPF Housing Grant.
“Singapore is at a crossroads where we are seeing a widening income gap between the rich and the poor. Our Gini coefficient is now the second highest in the developed country after Hong Kong. These measures will help bridge the gap for the low and middle-income families as well as singles as wages have not gone up in tandem with property prices. Ultimately, it will allow them to get their first foot in the property market.”
Impact on the overseas buying market.
“Almost 90 percent of property investors in Iskandar Malaysia are Singaporeans as they have been driven away by the property curbs in Singapore. We are also seeing families deciding to relocate across the causeway as some cannot keep up with the cost of living in Singapore. With these measures, first-time homeowners, as well as low and middle-income families will get more help in buying their first property in Singapore.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email firstname.lastname@example.org