News: Enhanced housing grant to boost demand for HDB resale flats

Sep 11, 2019

The new housing grant, streamlines two existing grants and comes with a higher wage ceiling. It also removed restriction on the location and type of flats being purchased.

Analysts expect the Enhanced Central Provident Fund (CPF) Housing Grant unveiled on Tuesday (10 September) to further boost demand in the Housing and Development Board (HDB) resale market, reported Today Online.

In May, the HDB resale market received a boost after the government announced changes to CPF use as well as public housing loans.

The new grant, which was announced by Minister for National Development Lawrence Wong, streamlines two existing grants and comes with a higher wage ceiling. It also removed restriction on the location and type of flats being purchased.

Wong revealed that the income ceiling for singles and couples for various HDB schemes and executive condos (ECs) have also been increased.

With this, PropNex chief executive officer Ismail Gafoor expects resale flats within mature estates to be in “greater consideration” for first-time buyers.

In fact, he expects the proportion of resale flats being sold to rise by 10 percentage points to 35 percent next year from 25 percent in 2018. The rest being new HDB flats.

“Not everyone would want to go for (a) BTO (unit) because they have to wait a long time and the location may not be good. There are not many BTO units in mature estates and even if they launch a project, the subscription rates are very high,” said OrangeTee and Tie head of research and consultancy Christine Ong.

Meanwhile, some analysts believe the grant will also help raise the demand for ECs as more buyers become eligible under the increased income cap of $16,000, up from $14,000 previously.

Ong shared that a number of EC plots have been sold and should be ready for launch next year. She noted that the new grant will “ensure more buyers will be eligible which can help to absorb the supply of ECs next year”.

However, the hike in demand that was triggered by the change could outstrip the current supply of ECs, said Nicholas Mak, head of research and consultancy at ERA Realty.

“(ECs) take a long time to be ready. They can only launch the supply 15 months after they buy the land and already there is a shortage of EC projects,” he said.

 

Agnes Ong at PropertyGuru, edited this story. To contact her about this or other stories, email agnes.ong@propertyguru.com.sg

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