HDB announces fourth round of cooling measures and higher grants for lower-income flat buyers

SINGAPORE: In a statement released late on Monday night (19 August), the Housing & Development Board (HDB) and the Ministry of National Development (MND) unveiled new measures aimed at cooling the HDB resale market and providing increased support for lower-to-middle income first-time home buyers.

Starting from 20 August 2024 at 12:00am, the Loan-to-Value (LTV) limit for HDB loans will be reduced from 80% to 75%.

This adjustment aligns the LTV limit for HDB loans with that of financial institution loans, which also remains at 75%.

“Given the sustained, strong, broad-based demand for HDB resale flats, these measures will help cool the market and encourage prudent borrowing, thus making housing more affordable for lower-to-middle income first-time home buyers,” said HDB and MND in the statement.

This marks the fourth round of property cooling measures since December 2021.

Additionally, HDB will enhance financial support for first-time flat buyers in the lower-to-middle income brackets by increasing the Enhanced CPF Housing Grant (EHG) to up to S$120,000 (approximately US$91,760) for families and S$60,000 for singles.

Currently, the EHG provided up to S$80,000 in grants for families and S$40,000 for singles purchasing their first new or resale flat.

During his National Day Rally speech on Sunday, Prime Minister Lawrence Wong announced the EHG increase to better support first-time home buyers, particularly those from lower-income groups.

Addressing young Singaporeans, he assured them, "Once you start work and wish to settle down, we will make sure that there is an HDB flat that is within your budget in every region.”

“We will always keep public housing in Singapore affordable for you.”

HDB & MND: Cooling measures and increased supply help curb HDB resale price growth

In its statement, the Government said earlier cooling measures and efforts to increase flat supply have helped moderate the rise in HDB resale prices.

It highlighted that HDB resale prices increased by 4.9% in 2023, a significant decrease from the 10.4% rise in 2022.

However, resale prices continued to rise by over 4 percent in the first half of 2024, attributed to “strong, broad-based demand coupled with some supply tightness, as fewer flats reached their minimum occupation period this year.”

To “further stabilise the HDB resale market and encourage flat buyers to borrow prudently,” the Government is tightening HDB loan-to-value limits.

The revised loan limit will apply to complete resale applications received by HDB on or after August 20 and to Build-to-Order flat applications from the upcoming October launch onwards.

HDB loan limits were last reduced in September 2022 from 85 percent to 80 percent as part of previous property cooling measures.

HDB and MND emphasized that the impact of the tightened loan limits on first-time buyers, especially those from lower-income households, will be mitigated by significant housing grants.

For example, eligible first-time families buying a resale flat could receive up to S$230,000 in housing grants.

This includes the revised EHG of up to S$120,000, a CPF Housing Grant of up to S$80,000, and a Proximity Housing Grant (PHG) of up to S$30,000.

Eligible singles purchasing a resale flat for the first time could receive up to S$115,000 in housing grants, which include the revised EHG of up to S$60,000, a CPF Housing Grant of up to S$40,000, and a PHG of up to S$15,000.

Maximum grant of S$60,000 for singles with average monthly income of S$750 or less

The increase in the EHG will range from S$5,000 to S$40,000 for families, and from S$2,500 to S$20,000 for singles, depending on monthly household income.

For example, families with an average monthly household income of S$1,500 or less will be eligible for the maximum grant of S$120,000.

Similarly, singles with an average monthly household income of S$750 or less will be eligible for the maximum grant of S$60,000.

HDB and MND also mentioned that home buyers with an HDB Flat Eligibility (HFE) letter, which confirms their eligibility to buy a flat and receive grants, will not need to apply for a new one. The letter will be updated to reflect the new EHG amount.

Eligible first-time buyers with a pending resale HDB flat transaction will automatically receive the additional grant, according to the authorities.

HDB and MND assure resale flats remain affordable to most home buyers

According to official data released in July, HDB resale prices have been rising steadily since the second quarter of 2020.

In July, a five-room flat at Skyoasis @ Dawson on Margaret Drive set a new record for the highest transacted price for a resale flat, selling for S$1.73 million.

July also saw a new record in the number of million-dollar HDB flats sold, with a total of 120 such transactions, 56 of which were for four-room flats.

In the first seven months of this year, 539 HDB flats were sold for at least S$1 million, compared to 470 million-dollar flats sold during the entire previous year.

Despite rising prices, HDB and MND emphasized that resale flats remain affordable for most home buyers.

They pointed out that in 2023, eight out of 10 first-time families who purchased resale flats used 25 percent or less of their monthly household income to service their HDB loans.

These buyers were generally able to cover their monthly installments using their Central Provident Fund contributions, with little to no cash outlay required.

“HDB flats that are sold at very high prices make up only a very small minority of total resale transactions,” said the authorities.

They also reaffirmed the Government’s commitment to keeping public housing affordable and accessible to Singaporeans.

“We will continue to monitor the property market closely and adjust policies as necessary to foster a stable and sustainable property market,” said HDB and MND.