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SG Set income cap for housing grants, say experts

Property Here - Wednesday, August 21, 2013

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Several consultants believe that the new housing grants announced by Prime Minister Lee Hsien Loong in his recent National Day Rally speech should come with an income ceiling limiting them to only lower-middle income buyers, media reports said.

According to Nicholas Mak, Research Head for SLP International, the cap should be between S$4,000 to S$5,000, as anything higher would lead to an ‘over-consumption’ of four-room flats.

“It’s better to start with a low income cap, then raise it later if needed, than to start high and try to bring it down later,” he said.

Ku Swee Yong, Chief Executive of International Property Advisor, suggested the cap should be S$4,000 as the grant's aim is “to help those who are at risk of not being able to afford a flat”.

Meanwhile, Singaporean households have a median income of S$7,570, while the median household income of applicants for four-roomers in non-mature estates is S$4,100, said reports.

The Special CPF Housing Grant is available to buyers whose monthly incomes are S$2,250 or less; which means the full S$20,000 will only be given to those earning S$1,500 and below.

Observers noted that lower-middle income buyers are encouraged by this extension to opt for three- or four-room flats and avoid over-stretching themselves.

“The message was clear to buyers: Work within your means...He (PM Lee) was saying that the Government will help you upgrade later on, so don't over-commit yourself for your first flat,” said Pasir Ris-Punggol GRC MP Gan Thiam Poh.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@allproperty.com.sg