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New housing grant to breathe life into stagnant HDB resale market: Analysts

SINGAPORE — The Enhanced Central Provident Fund (CPF) Housing Grant announced on Tuesday (Sept 10) would inject more life into the tepid Housing and Development Board (HDB) resale market, said property analysts.

New housing grant to breathe life into stagnant HDB resale market: Analysts

Property analysts said the enhanced housing grant would inject more life into the tepid Housing and Development Board (HDB) resale market.

SINGAPORE — The Enhanced Central Provident Fund (CPF) Housing Grant announced on Tuesday (Sept 10) would inject more life into the tepid Housing and Development Board (HDB) resale market, said property analysts.

The analysts noted that the HDB resale market had already received a boost in May with changes to CPF use and public housing loans — and that the latest move was likely to further stimulate demand.

Some of the analysts interviewed by TODAY on Tuesday also agreed with the Government's move to make resale flats more affordable for first-time buyers who do not wish to wait too long for a Build-to-Order (BTO) unit.

The new grant, which streamlines two existing grants and has a higher wage ceiling, was unveiled by Minister for National Development Lawrence Wong on Tuesday. The grant will remove restrictions on the type and location of flats being bought.

Mr Wong said that while the authorities need to ensure adequate supply of new flats, “it will not be possible to meet all of the growing demand with new flats alone”. This is because in some locations, particularly in the mature estates, there is not enough land to build so many new units, he noted. 

Mr Wong said that last year, 25 per cent of first-timer families bought resale flats while 75 per cent bought new units. He pointed out that the proportion of those who bought new flats was “already much higher” than a decade ago when it was 55 per cent. 

“Over the longer-term, we have to ensure there is a sustainable balance in the demand and supply of flats,” he added. 

 

Mr Wong also announced that the income ceiling for couples and singles for various HDB schemes as well as executive condominiums (ECs) have also been raised. Last month, he said that the HDB August sale exercise would be pushed to September to make way for the “upcoming changes”, as he called them at the time, which have now been unveiled.

RESALE FLATS IN MATURE ESTATES 'SET TO SEE RISE IN DEMAND'

Property experts told TODAY that they believe the new grant will increase demand for resale flats, especially those in mature estates.

Ms Christine Ong, who is the head of research and consultancy at OrangeTee and Tie, said that young couples may consider buying a resale flat over a BTO unit due to time and location constraints.

“Not everyone would want to go for (a) BTO (unit) because they have to wait a long time and the location may not be good. There are not many BTO units in mature estates and even if they launch a project, the subscription rates are very high,” she said.

Agreeing, real estate agency PropNex’s chief executive officer, Mr Ismail Gafoor, said that he expects that resale flats in mature estates will be in “greater consideration” for first-time buyers, especially if they can afford it.

Mr Gafoor added that he believes that by the end of next year, the proportion of resale flats being bought by first-timer families may rise 10 percentage points from 25 per cent in 2018 to 35 per cent. 

Indeed, potential first-time buyer Chan Yu Siang, 23, told TODAY that the announcement has led him to consider resale flats as one of his options. Previously, Mr Chan and his girlfriend had not considered buying a resale flat due to the lack of subsidies.

Mr Chan, who is a student at the Singapore Management University, added that the grant gives him the opportunity to consider living closer to both his own parents and his girlfriend’s parents. Both of them live in mature estates.

GRANT WILL 'HELP EXECUTIVE CONDOMINIUM MARKET'

Some analysts also welcomed the move as the grant could help to increase the demand for ECs as more Singaporeans become eligible under the new household income cap, which has risen from S$14,000 a month to S$16,000.

Ms Ong said that a number of plots for new ECs have been sold and should be ready to be launched in the coming year. The new grant will “ensure more buyers will be eligible which can help to absorb the supply of ECs next year,” she said.

There are currently two EC projects available for sale — Rivercove Residences at Anchorvale Lane and Piermont Grand at Sumang Walk.

However, head of research and consultancy of ERA Realty Nicholas Mak believes that the increase in demand triggered by the changes announced on Tuesday may outstrip the current supply of ECs.

“(ECs) take a long time to be ready. They can only launch the supply 15 months after they buy the land and already there is a shortage of EC projects,” he said.

 

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HDB property housing resale flat

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