Singapore HDB announces measures to cool resale prices, more support for first-time home buyers

The Singapore Housing & Development Board (HDB) has announced measures — effective from today — that would result in more support for lower-to-middle income first-time home buyers and a cooling of resale prices for HDB homes.

In a media release issued yesterday, HDB said that from 20 August 2024, the Loan-to-Value (LTV) limit for HDB housing loans would be lowered by 5 percentage points from 80 per cent to 75 per cent.

Also, the Enhanced CPF Housing Grant quantum would be increased to improve affordability for lower-to-middle income first-time home buyers, said the release.

“These measures further encourage financial prudence and promote a stable and sustainable market,” according to the HDB release.

It added: “As [Singapore] Prime Minister Lawrence Wong announced in the National Day Rally 2024, the Government will increase the Enhanced CPF Housing Grant (EHG) quantum for both new and resale flats to support first-time home buyers. The EHG will be increased:

• by up to SGD 40,000 for eligible first-timer families, from the current maximum grant amount of SGD 80,000 to SGD 120,000; and
• by up to SGD 20,000 for eligible first-timer singles, from the current maximum grant amount of SGD 40,000 to SGD 60,000.”

The release said that given “the sustained, strong, broad-based demand” for HDB resale flats, “these measures will help cool the market and encourage prudent borrowing, thus making housing more affordable for lower-to-middle income first-time home buyers”.

Lowering of LTV limit for HDB housing loans

The Singapore Government closely monitors the HDB resale market. Earlier rounds of cooling measures and the ramped-up Build-To-Order (BTO) flat supply have helped to moderate the increase of HDB resale prices.

HDB resale prices grew by 4.9 per cent in 2023, down significantly from 10.4 per cent in 2022.

However, resale prices still rose by more than 4 per cent in the first half of 2024. This was driven by strong, broad-based demand, coupled with some supply tightness, as fewer flats reached their Minimum Occupation Period this year.

The latest revised HDB LTV limit (lowered from 80 per cent to 75 per cent) will apply to complete resale applications that are received by HDB on or after 20 August 2024, as well as BTO applications for the October 2024 BTO exercise onwards.

The LTV limit for loans granted by financial institutions remains unchanged at 75 per cent.

“First-time home buyers, especially lower-income households, will be less affected by the lower LTV limit, as they receive significant housing grants,” said HDB. “To provide further support to lower-to-middle income first-time home buyers, we will also enhance the EHG.”

Increase in Enhanced CPF Housing Grant

Introduced in September 2019, the EHG is a means-tested grant that provides additional support for lower-to-middle income households buying new or resale flats as their first home.

Currently, eligible first-timer families and singles buying a flat can receive up to SGD 80,000 and SGD 40,000 in EHG, respectively.

The EHG amount is tiered, based on household income, with no restrictions on flat type and location. The EHG is progressive, so that lower-income households receive more support for their home ownership aspirations.

Since its introduction, about 72,300 first-timer households have benefited from EHG, amounting to more than SGD 2 billion.

In the first six months of 2024, about SGD 204 million in EHG was disbursed to around 7,000 first-timer households. Of the 72,300 first-timer households who have received EHG so far, 4 in 10 bought resale flats while the remaining 6 in 10 bought a flat from HDB across the various sales modes (i.e., BTO, Sale of Balance Flats, and open booking of flats).

With the revised EHG, plus the existing CPF Housing Grant and Proximity Housing Grant (PHG), first-time home buyers will receive greater help in their flat purchases.

● New Flats: Eligible first-timer families who buy a new flat will receive up to SGD 120,000 in EHG, on top of the significant market discount in the flat price, while singles will receive up to SGD 60,000 in EHG.

● Resale Flats: Eligible first-timer families who buy a resale flat will receive up to SGD 230,000 in housing grants, comprising the revised EHG of up to SGD 120,000; a CPF Housing Grant of up to SGD 80,000; and a PHG of up to SGD 30,000.

For eligible first-timer singles who buy a resale flat, they can receive up to SGD 115,000 in housing grants comprising the revised EHG of up to SGD 60,000; a CPF Housing Grant of up to SGD 40,000; and a PHG of up to SGD 15,000.