15-month wait-out period to moderate HDB resale flat demand, ensure affordability: Desmond Lee
THE 15-month wait-out period imposed on current and former private property owners will moderate demand for Housing Board resale flats and keep them affordable, especially for first-time home buyers, said National Development Minister Desmond Lee.
This is because private residential property owners generally have more means to buy resale flats than first-time home buyers or existing HDB flat owners, said Lee in video remarks on his ministry’s YouTube page on Friday (Sep 30) evening.
“Some may not even need to take loans to complete their purchase. They therefore tend to pay higher amounts of cash-over-valuation (COV) when they buy resale flats,” he said.
COV refers to the difference between the sale price of a resale flat and its actual HDB valuation. The difference can only be paid for in cash by the buyer.
From Friday, private home owners must wait 15 months after the sale of their current home before they can buy an HDB resale flat.
Exceptions are made for those aged 55 and above who are moving from a private property to a four-room or smaller HDB resale flat, a two-room flexi flat or a community care apartment intended for seniors.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
HDB will also, on a case-by-case basis, exempt those with genuine housing needs or those who face extenuating circumstances regardless of their age, said Lee.
“We intend for this (15-month wait-out) measure to be temporary. We will review this, depending on overall demand and market changes,” said Lee.
The latest round of cooling measures that kicked on Friday, just nine months after the last tranche of measures, aims to nip over-borrowing as both HDB resale and private home markets show growing signs of overheating.
Noting that some have expressed concerns that the measures place a larger burden on first-time and lower-income families looking to buy a home, Lee said: “This is not the case.
“This move is not expected to affect first-timer and lower income home buyers significantly as they may receive housing grants... and tap their CPF savings to pay for the flat purchase.”
Two big moves to tighten the maximum amount that can be taken for home loans kicked in on Friday.
The first is raising the medium-term interest rate floor used to compute and assess borrowers’ abilities to repay, and therefore qualify for, a loan.
The second is lowering the loan-to-value (LTV) limit, which means buyers can borrow less than before from HDB to finance their home purchase.
Lee said these moves are to better protect home buyers by borrowing prudently and not overstretching themselves.
“This helps reduce the risk of them facing future difficulties in servicing their home loans amid the uncertain economic outlook and rising interest rate environment,” he added.
Mr Lee said the moves come at a time when market interest rates have risen significantly over the last year, compared with the years of exceptionally low interest rates from 2013 to 2021.
“This will help them avoid difficulties in servicing their long-term home loans, as we think mortgage interest rates are likely to rise further in future, along with US interest rates,” said Mr Lee.
Since the last round of cooling measures in December 2021, housing prices have continued to gain pace, causing some anxiety about affordability, especially among young families looking to buy their first home, said Mr Lee.
Acknowledging that rising home prices have been a concern for Singaporeans, Lee said the latest measures, coupled with the ramp-up in new flat supply, will help to moderate prices and meet strong demand.
“We will continue to monitor the property market and ensure that they remain relevant and in line with economic fundamentals,” he said. THE STRAITS TIMES
Copyright SPH Media. All rights reserved.
