SINGAPORE — A higher income ceiling and greater subsidies for first-time public housing flat buyers are among possible tweaks to housing policies that could be announced at the National Day Rally on Aug 20, said property analysts.

Such moves, if they transpire, would be aimed at ensuring that Housing and Development Board (HDB) flats remain affordable and accessible, the analysts told TODAY on Thursday (Aug 10).

They were speaking after Prime Minister Lee Hsien Loong said in his National Day message that the Government is looking to adjust the HDB scheme to ensure that public housing remains affordable amid a changing housing landscape.

“We must still ensure public housing is accessible and affordable for Singaporeans of all income groups. We must keep our housing schemes fair and inclusive for all," PM Lee said on Tuesday.

"We have some ideas on how to do so, which I will share at the National Day Rally," he added.

Property experts who spoke to TODAY noted that the income ceiling for Build-to-Order (BTO) flats and executive condominiums (EC) were last reviewed in 2019. ECs are upscale HDB flats that become private after 10 years.

A revision to the income ceiling now would therefore be “timely”, said property analysts Lee Sze Teck and Christine Sun.

“This will widen the demand pool and ensure accessibility,” said Mr Lee, who is senior director for data analytics at Huttons Asia. 

Agreeing, Ms Sun, who is senior vice president of research and analytics at Orange Tee and Tie, said that there may be more public housing projects in prime sites in the future, which would command higher prices.

“The middle or sandwich class of first-timers may not be able to buy these new BTO flats based on the current income ceiling," she said, referring to couples who are looking after both their children and ageing parents.

"At the same time, they may not be able to afford private homes or HDB resale flats if prices continue to trend higher,” she said.

Mr Lee Sze Teck opined that the income ceiling for HDB flats for families may be revised from the current S$14,000 per month to S$16,000. For ECs, this figure might be raised from the current S$16,000 to $18,000 per month. 

On the other hand, key executive officer at ERA Realty Network Eugene Lim expects “no changes” to the income ceiling.

He based this on a Ministry of National Development parliamentary reply last November that the Government does not intend to raise the income ceiling for grants to buyers of new and resale public flats despite rising inflation.

Mr Lim said that the current income ceiling means that eight in 10 Singaporeans are already eligible to apply for a BTO flat and nine in 10 are eligible to apply for an EC.

MORE GRANTS, TWEAK TO PRICING MECHANICS

Mr Lee of Huttons said that revisions in income ceiling may also come with tweaks to existing housing grants disbursements.

“There may be more tiers to ensure those at a higher income ceiling may still receive some grants,” he said. “This will help with affordability.”

Mr Lim of ERA said that the grant adjustments can be done by adjusting the qualifying criteria and recalibrating the amount disbursed, adding that it is within the Government’s control and “quite easy" for it to recalibrate.

He also noted that the HDB prices new flats “with affordability in mind” by first determining market value and then applying a discount.

“The Government can apply a bigger market discount to the assessed market value to calibrate the new flat selling price to ensure affordability,” he said.

A combination of both a revised housing grant and pricing mechanics can help ensure affordability particularly for first-time buyers, he added.

Besides changes to income ceiling or grant disbursement, Mr Lee of Huttons pointed out that the current mortgage service ratio of 30 per cent could be revised upwards to help with affordability and accessibility to public housing.

“(This is) especially for those who are in their prime working years and can use more of their monthly income to service the loan,” he said.

RECLASSIFICATION POSSIBLE, BUT NOT HELPFUL

PM Lee in his speech on Tuesday talked about how non-mature estates are steadily maturing and how more new flats will be built in existing estates.

Analysts noted that the classification of neighbourhoods into mature and non-mature estates has been under review.

Last November, National Development Minister Desmond Lee said the Government is reviewing whether the classification of public housing estates as mature or non-mature should be adjusted to “keep pace with the times”.

He added at that time: "As the non-mature estates start to come of age and the lines between them and the mature estates blur, such distinctions are becoming less relevant.”

Ms Sun said that the distinction between the two “could gradually be blurred” as amenities become more comprehensive in non-mature estates while newer flats are built in older, mature estates.

“The review of mature and non-mature estates classification may possibly result in HDB estates reclassified as central and non-central similar to how the private residential market is segmented,” said Mr Lee of Huttons.

Resale flats in mature estates in general fetch higher prices. Newly launched BTOs, too, are typically sold at higher prices than in non-mature estates.

Analysts who spoke to TODAY last November were mixed on how any reclassification of estates may impact prices, though some noted that changing the status of a particular estate from non-mature to mature may impact perception over time and narrow price gaps.

However, analysts on Thursday said that a rejig of the classification system would be unlikely to directly impact the affordability of public housing.

Mr Lee of Huttons said that the perception of flats in mature estates having higher prices “may still remain” even after these estates are reclassified or renamed.

Mr Lim said for first-timer family applicants, any reclassification would not impact them as 95 per cent of BTO flats are set aside for them to begin with, both in mature and non-mature estates.

“For resale HDB flats, flat prices are determined by location, property attributes and the supply versus demand in the respective area — not whether mature or non-mature estate,” he added.

POSSIBLE MEASURES FOR RENTAL FLAT DWELLERS AND ELDERLY 

Property analysts also floated some other possible changes to the public housing system to make them accessible for certain groups.

Rent to buy

Mr Lee of Huttons and Ms Sun suggested providing more rental units for Singaporeans and allowing them to buy over these units.

Currently, the Fresh Start housing scheme helps targetted families living in public rental flats move to home ownership by allowing them to buy a two-room flexi or three-room flats on a shorter lease.

Mr Lee suggested a new home ownership scheme for those eligible to rent a flat, with an option to buy it later, with the rent paid used to offset the purchase price.

“This will help Singaporeans for example single parents who struggle with the downpayment for various reasons. This will improve accessibility,” he said.

Housing for elderly

Given Singapore’s ageing population, adjustments specifically for the elderly may also be possible, said the experts.

Dr Lee Nai Jia, head of real estate intelligence, data and software solutions at PropertyGuru Group noted that a Health District @ Queenstown was piloted in 2021.

He said that updates on how such health districts can be scaled to other places can be expected, along with community care apartments targetted at the elderly.

The elderly could also be offered additional schemes to cash out part of their housing equity to supplement their Central Provident Fund savings, he added.

Mr Lee of Hutton said a new pricing model for BTO flats could be introduced.

Noting how two-room flexi flat buyers have the option of selecting the tenure to cover them until the age of 95, he said this flexible tenure mode could possibly be extended to three-room flats too.

“It could help seniors who are relying on a domestic worker as the additional room can double up as a helper’s room or be rented to offset daily expenses,” he said, adding that this would improve affordability of flats.