August 2024 HDB Policy Changes: Enhanced Affordability and Market Cooling Measures
Published on 23/08/2024
The Housing & Development Board (HDB) of Singapore has introduced several significant policy changes aimed at cooling the resale market and providing greater support to first-time homebuyers. These changes, effective from 20 August 2024, address affordability concerns and promote sustainable housing market practices. Below is a detailed breakdown of the measures:
Lower Loan-to-Value (LTV) Limit
To align with loans granted by financial institutions, the LTV limit for HDB housing loans has been reduced from 80% to 75%.
This adjustment:
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Encourages financial prudence among buyers.
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Reduces the risk of over-leveraging.
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Applies to resale applications received after 20 August 2024 and to Build-To-Order (BTO) applications starting from the October 2024 exercise.
Despite this reduction, first-time buyers in the lower-income bracket remain largely unaffected due to substantial housing grants available to them.
Enhanced CPF Housing Grant (EHG)
The Enhanced CPF Housing Grant, a means-tested initiative, now provides higher quantum amounts:
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Families can receive up to $120,000 (previously $80,000).
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Singles can receive up to $60,000 (previously $40,000).
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These increases are structured to offer more significant benefits to lower-income households. The following table summarizes the revised grants:
Table 1: Housing Grants for Eligible First-Timer Families
Source: HDB
Table 2: Housing Grants for Eligible First-Timer Singles
Source: HDB
Market Cooling and Stabilization Efforts
Despite previous measures and an increased supply of BTO flats, HDB resale prices rose by over 4% in the first half of 2024.
Source: HDB, URA
The chart illustrates the price trend of HDB (Housing and Development Board) units across all districts from 2014 to 2024, focusing on the average price per square foot (PSF).
Key Observations:
• PSF (2014 - 2024):
o Average PSF: $441 (2014)
o Average PSF: $603 (2024)
• PSF Increase:
o Difference in PSF: $162 PSF increase
o Percentage Increase: +36.73%
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• Trend Overview:
o From 2014 to 2019, the average PSF experienced slight fluctuations, even decreasing at points (e.g., dropping to $416 in 2019).
o A significant upward trend started after 2019, with a notable rise from $434 (2020) to $603 (2024).
o There was a sharp increase between 2020 ($434) and 2024 ($603).
The data shows a clear long-term upward trend in HDB average PSF prices, with a 36.73% increase over a decade. The turning point occurred around 2020 during the rise of the Covid-19 pandemic, where prices began a strong and steady upward climb.
To address this:
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HDB will offer 8,500 flats across 15 projects in the October 2024 BTO exercise, contributing to the planned supply of 19,600 BTO flats in 2024.
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The government’s ongoing commitment aims to achieve a supply target of 100,000 flats from 2021 to 2025.
This increased supply, coupled with the revised policies, is expected to moderate price growth and ensure affordability for the majority of buyers.
Affordable Housing for First-Timers
First-time homebuyers will now benefit from higher grant amounts:
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New Flats: Families receive up to $120,000, with a significant market discount on flat prices.
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Resale Flats: Families can receive up to $230,000 in combined housing grants (EHG, CPF Housing Grant, and Proximity Housing Grant).
Notably, about 80% of first-timer families who collected keys to their resale flats in 2023 used 25% or less of their monthly household income to service HDB loans, reflecting the affordability of these options.
Overview
The revised measures by HDB reaffirm the government’s commitment to making housing affordable and accessible while maintaining a stable property market. With these changes, Singaporeans can look forward to a more supportive and equitable housing landscape.
Contact us today to find out how these changes can impact your current property’s prices!