In alignment with the National Day Rally speech, the government has introduced new cooling measures to moderate the HDB resale market and provided more detailed information on the increase in the Enhanced CPF Housing Grant (EHG) for first-time buyers of both new and resale flats. These steps reflect the government's ongoing commitment to ensuring a balanced and sustainable housing market accessible to all Singaporeans.

New LTV Limits Introduced

The Loan-to-Value (LTV) limit for HDB housing loans has been reduced from 80% to 75%, effective from 20 August 2024. This change is intended to align HDB loans with those offered by financial institutions, encouraging buyers to avoid over-leveraging in a potentially lower interest rate environment. The tightening of borrowing limits aims to manage finances more conservatively, potentially reducing the risk of market overheating.

HDB Resale Market Trends

HDB resale prices rose by 4.2% in 1H2024, compared to a 2.5% rise in the same period of 2023. The expiration of the 15-month waiting period in December 2023 allowed private property sellers to re-enter the HDB resale market, boosting demand and increasing the number of million-dollar flat transactions. Additionally, fewer Build-To-Order (BTO) exercises and reduced completion numbers in 2024 contributed to heightened competition among buyers, further driving up resale prices.

Support for First-Time Homebuyers

The government has increased the Enhanced CPF Housing Grant (EHG) to support first-time homebuyers, particularly those from lower-income groups. The maximum quantum of the EHG will be raised to $120,000 for eligible first-timer families and up to $60,000 for singles. For resale flats, first-timer families will benefit from up to $230,000 in housing grants, which include the revised EHG, a CPF Housing Grant of up to $80,000, and a Proximity Housing Grant (PHG) of up to $30,000.

Conclusion

The cooling measures, coupled with the increased support for first-time buyers, reflect a balanced strategy aimed at ensuring a resilient and inclusive housing market. The government's approach underscores its commitment to promoting financial prudence and safeguarding the long-term stability of the public housing segment, ensuring homeownership remains accessible to all Singaporeans, even in a potentially lower interest rate environment.

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Prepared By: 

Mohan Sandrasegeran 

Head of Research & Data Analytics