No plans to raise income ceiling for HDB grants as it could negate Govt's priority of cooling resale prices: Indranee

SINGAPORE — The Government's priority is to rein in resale public flat prices and it does not intend to raise the income ceiling for grants to buyers of new and resale public flats despite rising inflation.

Ms Indranee Rajah, Second Minister for National Development, said in Parliament on Tuesday (Nov 29) that doing so may negate the Government's efforts to cool the resale market of Housing and Development Board (HDB) flats, because it could push up resale prices further.

She was referring to the Enhanced CPF Housing Grant, which is available for eligible buyers of both Build-To-Order (BTO) flats and resale flats built by HDB.

The possible scenario is that an increase in grants may lead to more expensive flats becoming more affordable to prospective buyers. This would push up demand and prices.

In September, the Government introduced various measures to try to cool resale HDB flat prices, which had been consistently rising for over two years.

Ms Indranee, who is also a Minister in the Prime Minister's Office and Second Minister for Finance, said that the Government’s other priority is to boost the supply of new flats to meet strong demand for public housing.

“Thus, any review to raise the income ceiling would also have to be balanced against greater competition for the finite resources of the Government,” she added.

She was responding to a parliamentary question from Mr Ang Wei Neng, Member of Parliament for West Coast Group Representation Constituency.

In a supplementary question, Mr Ang had asked if the Government would consider reviewing the criteria to qualify for the Enhanced CPF Housing Grants.

He said that the increase in nominal incomes without a growth in real income will put many people at a disadvantage because they are unable to qualify for a higher Enhanced CPF Housing Grant. 

Nominal income refers to earnings before they are adjusted for inflation, while real income refers to earnings after accounting for inflation rates.

The increase in the nominal incomes of households could result in them being disqualified from applying for a BTO flat or an Executive Condominium unit, even though their real wages have not grown.

Mr Ang had also asked in his parliamentary question if HDB was prepared to review the monthly household income ceiling for prospective buyers of BTO flats and Executive Condominium units respectively, given the high inflation rate. 

Right now, couples who want to buy a BTO flat must not have a monthly household income of more than S$14,000 combined. This figure is S$16,000 for those looking to buy an Executive Condominium, which is a public-private housing hybrid developed and sold by private developers but is subsidised by the Government.

In his supplementary question, Mr Ang repeated his request for a review of the income ceiling for public flats and asked if the Ministry of National Development (MND) could factor in changes in wages due to inflation.

He noted that the nominal income of Singaporeans is likely to increase next year as wages catch up with inflation, even as their real wages fall behind these cost-of-living increases.

Pressing his point, Mr Ang said that although the difference in qualifying income ceilings has been S$2,000 since 2010 for applicants of a BTO flat and an Executive Condominium unit, the difference has narrowed in terms of percentage over the same period.

For example, in 2010, the income ceiling for eligible applicants of a BTO flat was S$8,000, and for an Executive Condominium unit, it was S$10,000. This translates to a difference of 25 per cent.

Now, the difference is 14 per cent, he said.

Speaking to TODAY separately, Mr Ang explained that the narrowing percentage difference between the income ceilings for both types of housing meant that some property buyers could be priced out of purchasing an Executive Condominium unit due to a rise in their nominal wage.

In her response, Ms Indranee said that there are no plans to revise the income ceilings for BTO or Executive Condominium units at this point.

She said that the income ceilings for both are reviewed regularly to ensure that public housing remains affordable for the majority of Singaporeans, with housing subsidies given to those who need them the most.

The Government considers factors such as household incomes of Singaporeans and prevailing housing market conditions in its review.

“We are also mindful that lower-income households could be crowded out by an adjustment to the income ceilings,” Ms Indranee added, noting that the income ceiling was last reviewed and adjusted in 2019.

In her response, she also said that MND aims to look at the demand and supply of flats, which have been constrained in recent years, rather than just a particular measure in isolation such as revising the income ceiling for flat purchases.

She said that adjusting the income ceiling in and of itself is not necessarily the best measure, and that the Government will look at the housing system overall to see how it can ensure that housing remains accessible and affordable to Singaporeans.

On whether housing grants can be increased, Ms Indranee said that the Government can look into that.