Opinion
“Cooling measures” or new policies to help the rich buy HDB resale flats?
Opinion: The increase in resale HDB flat grants to S$230,000, compared to just S$120,000 for BTO flats, raises questions about fairness. Wealthier buyers face fewer hurdles, while lower-income families must wait years for a BTO flat. The recent Loan-to-Value (LTV) ratio cut from 80% to 75% may also disproportionately impact the less affluent.
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CORRECTION NOTICE:
This post contains a false statement of fact.
For the correct facts, visit: https://www.gov.sg/article/factually260824-b
by Leong Sze Hian
The maximum housing grants for Build-To-Order (BTO) flats have just been increased to S$120,000, with eligibility based on income means testing—households with an income not exceeding S$1,500 can receive the maximum grant of S$120,000.
In stark contrast, the maximum grant for resale flats has been increased to S$230,000, and there is no income means testing. The only requirement is that the household income ceiling must not exceed S$14,000 (S$9,000 in order to get the maximum grant of S$230,000).
For instance, households with an average monthly income of S$8,501 to S$9,000 receive only a S$5,000 grant for BTO flats, while those with a household income just below S$14,000 can receive up to S$230,000 in grants for resale flats (S$9,000 in order to get the maximum grant of S$230,000).
This raises an important question: Why are we providing more substantial financial assistance to, arguably, wealthier individuals to purchase more expensive resale flats, while offering less to those who may only be able to afford BTO flats?
For instance, households with an average monthly income of S$8,501 to S$9,000 receive only a S$5,000 grant for BTO flats, while those with a household income just below S$14,000 can receive up to S$230,000 in grants for resale flats.
Moreover, the recently announced decrease in the Loan-to-Value (LTV) ratio from 80% to 75% may have little impact on wealthier individuals, who can still comfortably finance their purchases.
In fact, in many cases, the 5% reduction in LTV for resale buyers may be outweighed by the S$40,000 increase in the grant.
For example, a reduction of S$50,000 in LTV for a loan up to S$800,000 may be less significant than the S$40,000 grant increase. This raises the question of whether this is truly a “cooling measure” or if it actually benefits wealthier buyers even more.
This further highlights the disparity, as those with greater financial means are less affected by such changes, making it easier for them to take advantage of the substantial grants for resale flats.
Furthermore, is it fair or equitable to have public housing policies that allow wealthier individuals to buy resale flats immediately (with up to S$230,000 in grants), while those with lower incomes must undergo income means testing to determine the grant amount, participate in a ballot, and potentially wait 4 to 5 years for a BTO flat?
It seems that for wealthier individuals, buying a resale flat may be a straightforward decision—qualify for up to S$230,000 in grants, hold the property for the Minimum Occupation Period (MOP) of 5 years, and potentially sell it for a profit. This profit would then be credited to their Central Provident Fund (CPF) accounts, along with the grant amount and accrued interest.
Are there any other public housing policies worldwide that, arguably, facilitate wealthier individuals in speculating and profiting more easily (such as upgrading to private property), while those with lower incomes may have to remain in Housing & Development Board (HDB) flats for most of their lives? These HDB flats typically decline in value after 40 years and become worthless at the end of the lease, meaning all the CPF savings and cash invested in the flat would be lost.
Perhaps we should explore and consider alternative and sustainable policy changes to mitigate the rising costs of both BTO and resale HDB flats.
For instance, we could gradually reduce the land cost component in the price of BTO flats or restrict Permanent Residents (PRs) from purchasing HDB resale flats.
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We should consider grant for newly wed couple that has been genuinely ballot for new HDB and still not able to award the ballot. As we wish newly wed couple to start a family , then grant to be given if they choose to buy a resale flat. Grant should apply for Singapore Citizen and both husband and wife is also Singaporean.
As long as govt tries to peg prices of BTO flats near or around the market value (resale price) of neighbourhood flats, BTO prices will continue to spiral out of reach to buyers. No matter how govt tweaks its policies, it is a vicious cycle of prices going up.
Just a lie. If really want to dampen demand by reducing LTV, then should remove the Grant, not increasing it. The reason HDB wants to reduce LTV is due to high interest rate environment. And significant increase of resale transactions. Annually HDB sold approx. 20,000 to 25,000 new flats. Year—-Number of HDB Resale Applications 2023—-26,735 2022—-27,896 2021—-31,017 2020—-24,748 2019—-23,714 2018—-23,099 If 40% of resale HDB took HDB loan, the average figure will be around 10,000. Add to approx 23,000 new HDBs which most likely will take HDB loan with an interest rate at 2.6% (2.5% CPF + 0.1%), the estimated… Read more »
Why should the Public be subsidising income earners of $14,000/- but refusing to declare a living wage? How many PRs in this group? How many have homes in their home countries that they are renting out?We are being made fools by the PAP government which shows that its loyalty and commitment is to the foreigners. Which First World will use taxpayer’s monies to fund foreigners to own Public flats and to profit from it at our expense? The government supports the high cost of resale flats.
First you local losers need to ask yourself, why are YOU LOWER INCOME? Why your wages considering coming from a supposed FIRST WORLD COUNTRY fall in the lower wages bracket which your country termed as lower wage now? That is where the PRIMARY or actual problem is, the rest like you losers finding the present cost of HDB daunting is the secondary cause, CAUSED BY THE PRIMARY ISSUE. That is why locals in truly first World countries eg like Finland has very little foreign labor and most if not all their locals earn ..FIRST WORLD WAGES to match their first… Read more »
Big grants Got to Check on your source? Can you kindly give some citations as well Leong.
Thank you.
When it comes to figures,
LSH is the MAN!!!
Would like to see how DL POFMA this?
😄
Made it this way
120000 and 230000 grant , we call it land costs grant .
Thank you Mr LSH..
Your articles are always enlightening ..
This write up is so on point.
Public housing in SG now is almost beyond the reach of alot of ordinary sgs….
Whats going to happen…
The ultra rich PRs are buying those million $ HDB resale flats.Cooling measures should be imposed on these groups with clearly net worth ceilings beyond which they can’t buy HDB resale flats.
Subsidy to housing is to boost housing buying sentiment and led to increase in housing prices. More subsidy only encourage more people to buy HDB flats and more buyers with limited supply means huge increase in price of flat and resale prices. HDB prices increase affect private housing like condo and eventually land prices increase and government is seller of land, the biggest gainer.
Is it the uber rich policy holders helping the ultra rich developers and contractors extract more money from the public, as in public funds and also from individuals?
So they can afford bigger and bigger landed homes costing tens of million dollars?