The income ceiling for HDB flats will be raised from S$10,000 to S$12,000, while that for executive condominiums (ECs) will be raised from S$12,000 to S$14,000.
Prime Minister Lee Hsien Loong announced the widely expected move in his National Day Rally speech on Sunday evening.
He said this is to allow more Singaporeans to buy new HDB flats and ECs. National Development Minister Khaw Boon Wan had earlier hinted at this move in June, noting that incomes have gone up since the ceiling was last raised in 2011.
Mr Lee also announced two other housing changes.
The first has to do with the Special CPF Housing Grant (SHG), which will be extended to cover more households. This will be done by raising the grant's household income ceiling of S$6,500 to S$8,500. With this, two-thirds of all households will qualify, up from just half of all households previously. The current maximum SHG amount of S$20,000 will also be doubled to S$40,000.
"The result - a median household buying a flat that previously received S$10,000 of SHG will now receive S$30,000 - three times as much," Mr Lee said.
The second change he announced was targeted at home renters who had bought a flat before but sold it, and are back living in rental flats.
This group of rental tenants are difficult to assist, because they have already benefited from previous HDB subsidies, and the government cannot just give them another grant because that would not be fair to others, Mr Lee said. But without a grant, it would be challenging for them to afford another flat. These families also tend to face many other problems related to their jobs, relationships, and children's education. Their housing problem is a result of those other problems, Mr Lee noted.
"I am very concerned about the future of this group. Without help, a flat of their own may be permanently out of reach. They will be trapped in poverty, and their children will be affected. And it will perpetuate the cycle into the next generation."
The government has decided to implement a "Fresh Start Housing Scheme" to help these second-time rental households own a two-room flat. These flats will come with shorter leases and stricter resale conditions to make them more affordable. The government will also support the family with counsellors to help them to solve their problems.