Reduced Loan Limits - 19th August 2024:
Late at night on the 19th of August 2024, the Government announced that the maximum loan that home buyers can take from the Housing Board to purchase their flats will be tightened from the previous 80% to 75%.
The loan-to-value limit for HDB housing loans will be lowered from 80 per cent to 75 per cent, meaning buyers will be able to borrow less than before. This brings the HDB loan limit in line with mortgages granted by financial institutions, which remain unchanged at 75 per cent.
According to the statement, the government is tightening HDB loan-to-value limits in order to “further stabilise the HDB resale market and encourage flat buyers to borrow prudently”. The revised loan limit will apply to complete resale applications received by HDB on or after Aug 20, and BTO applications from the upcoming October launch onwards.
Larger Grants for lower-income families:
HDB will also provide more financial support for those in the lower-to-middle income bracket, by increasing the Enhanced CPF Housing Grant (EHG) to up to $120,000 for families and $60,000 for singles buying their first new or resale flat.
Currently, the EHG gives a maximum of $80,000 in grants for families and $40,000 for singles buying their first flat.
How will this affect our market?
During his National Day Rally speech on Aug 18, Prime Minister Lawrence Wong had addressed housing affordability, pointing to efforts by the Government to ramp up supply in order to tamp down prices.
HDB resale prices have been rising continuously since the second quarter of 2020, according to official data released in July. In July, a five-room flat in Margaret Drive sold for $1.726 million, setting a record for the highest transacted price for a resale flat.
This will be the fourth round of cooling measures since December 2021. It is evident that the government is keeping their finger on the pulse of the HDB market, with the reduction of loan limits, introduction of Prime and Plus housing schemes and ramping up of BTO supply. The last time this happened was in 2013, when HDB prices were at an all time high. Subsequently, we started seeing HDB prices take a hit and gradually stabilised downwards.
Whether our current HDB prices will now take a downturn remains to be seen - but what is certain is that the government is monitoring the market and is determined to keep HDB prices affordable for Singaporeans.
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