More housing grants introduced

More housing grants introduced

    By Imelda Saad
    POSTED: 27 Aug 2013 6:43 PM
 
The government has introduced a slew of measures aimed at making the purchase of homes here more affordable.

SINGAPORE: The government has introduced a slew of measures aimed at making the purchase of homes here more affordable.

To help middle-income families afford their first home, the Special CPF Housing Grant of up to S$20,000 will be extended to middle-income households with a combined income of up to S$6,500.

That is up from the current household income ceiling of S$2,250.

This Special CPF Housing Grant scheme will also be extended to four-room flats in non-mature estates. Previously, the grant was only for two- and three-room flats.

National Development Minister Khaw Boon Wan said the move will help middle-income households who feel stretched by the rising cost of living.

Mr Khaw said: "I think it is a major move. We are going beyond low-income to what we call the middle-income. Middle-income will be above median, so I think S$6,500 is as good a level as one can set."

Observers see the raised income ceiling for the Special Housing Grant as generous, given that the median household income of Singaporeans is S$7,570, while the median household income of applicants for four-room HDB flats in non-mature estates is S$4,100 in 2012.

Singles will also benefit from the new measures.

The current Special CPF Housing Grant income ceiling for singles buying new two-room flats will be raised to S$3,250.

Christine Li, head of research & consultancy at OrangeTee, said: "It is very clear that the government wants to ease the burden of the lower-middle and middle-income families to own their HDB flats. Raising the income ceiling of the Special CPF Housing Grant from the existing S$2,250 to S$6,500 represents a fundamental shift in policy approach that takes us a step closer to being a more inclusive society.

"The household monthly income of S$6,500 covers about half of Singaporeans (median monthly household income for 41st to 50th percentile is $6,800). As the grant covers more middle income families, more attention could be diverted from the resale market, causing demand to fall."

Mr Khaw said this is a "significant shift in policy" as the government is going beyond helping the low-income to also extend help to the middle-income to buy their first flat.

Low-income families will be given help to upgrade through a Step-Up CPF Housing Grant of S$15,000.

This will apply to families living in subsidised two-room flats who want to three-room flats in non-mature estates.

Mr Khaw said this is a significant move as it will help low-income families upgrade to a bigger flat.

"It will give them and their children more space and a more valuable asset," he said.

The two new initiatives will start from the July 2013 Build-to-Order (BTO) exercise.

This means those who applied for a new BTO flat in July but have yet to select their new flat, will also benefit.

Even as the government gives out more grants to help Singaporeans own their first home, its underlying principle is prudence. This is to ensure these new policies are sustainable for generations to come.

Mr Khaw said: "It is something that we have to be very careful to manage so long as people are realistic about expectations. That is why part of the message in today's announcement is prudence. Just as PM Lee puts it, the government will do more. In this case, we give more grants and more subsidies but individuals also have to do more, which is really buying within your means and prudence."

He added: "Do not overstretch yourself because as we make housing flats cheaper, there may be a tendency to now buy even bigger flats. Then we are chasing our own tails. Flats will always be not affordable."

To ensure financial prudence in the purchase of public-housing, the Mortgage Servicing Ratio (MSR) limit will be reduced from 35 to 30 per cent of the borrower's gross monthly income.

The maximum tenure for HDB housing loans will also be trimmed from 30 to 25 years.

In tandem, the Monetary Authority of Singapore will make similar arrangements for the tenure of new housing loans and re-financing facilities granted by financial institutions for the purchase of HDB flats.

Separately, Permanent Residents (PR) who want to buy resale flats will have to wait three years after receiving their PR status. Prior to this change, they could buy a flat as soon as they received PR status.

PRs now account for some 20 per cent of the resale market.

Analysts said these measures will help to stabilise the HDB re-sale market in the long run.

Eugene Lim, key executive officer at ERA, said he expects the Cash-Over-Valuation to continue its downtrend and an overall price reduction of three to five per cent in HDB resale prices, over the next six months.

The latest initiatives signal the government's resolve in addressing concerns among Singaporeans over housing prices. The strongest commitment came from Prime Minister Lee Hsien Loong, who had said during the National Day Rally, that housing remains a means for the government to share the nation's success and to help level up poorer households.

- CNA/fa

- wong chee tat :)