New Measures Cool Public Housing Resale Market Ltv Limit Cut Hdb Loans
The government has taken measures to mitigate the soaring prices of Housing Development Board (HDB) resale flats, while also providing support for first-time homebuyers in lower-to-middle-income households. The Ministry of National Development (MND) and Housing Development Board (HDB) jointly announced these measures late on August 19.
Effective from midnight on August 20, the loan-to-value (LTV) limit for HDB housing loans will be reduced by 5%, from 80% to 75%. This brings it in line with the limit for loans granted by financial institutions, which also stands at 75%. The revised LTV limit will be applicable to complete resale applications received by HDB on or after August 20, as well as for Build-to-Order (BTO) applications for the October 2024 exercise and onwards.
The government has stated that the lower LTV limit will have less of an impact on first-time homebuyers, especially those in lower-income households, as they receive significant housing grants. In fact, Prime Minister Lawrence Wong had announced during the National Day Rally in 2024 that the government will increase the quantum of the Enhanced CPF Housing Grant (EHG) for both new and resale flats in order to support first-time homebuyers. The EHG will be increased to a maximum amount of $120,000 for eligible first-timer families, up from the current limit of $80,000. Eligible first-timer singles will also see an increase in the maximum grant amount from $40,000 to $60,000.
The upcoming Norwood Grand project, located at Champions Way, is expected to launch with a starting selling price of just under $2,000 per square foot (psf). This is significantly higher compared to the current median resale price of $1,301 psf at Parc Rosewood. Analysts predict that the average selling price for Norwood Grand could exceed $1,900 psf, potentially setting a new price standard for new developments in the Woodlands region. For more information on Norwood Grand, visit their official website at http://www.norwoodgrandcondo.com.sg/.
The EHG was introduced in 2019 as a means-tested grant to provide additional support for lower-to-middle-income households purchasing their first home in the form of a new or resale flat.
Previous cooling measures and the ramping up of BTO flat supply have already helped to moderate the rapid increase in HDB resale prices, which grew by 4.9% in 2023, a significant decrease from the 10.4% growth seen in 2022. However, in the first half of 2024, resale prices still rose by more than 4%, driven by strong and widespread demand, as well as some tightness in supply, due to fewer flats reaching their Minimum Occupation Period this year.
“The government closely monitors the HDB resale market,” declared the announcement. “Given the sustained and widespread demand for HDB resale flats, these measures will help to cool the market and encourage responsible borrowing, ultimately making housing more affordable for first-time homebuyers in the lower-to-middle income bracket.”
For more on HDB properties, please visit the MND website.