In Singapore, the government plays a hands-on role in the housing market, which is great for keeping homes affordable for future generations.
So how are the new cooling measures going to impact you?
If you’re considering buying a flat soon, it’s crucial to understand the new measures that come into effect today, 20th August 2024. It is important to know that cooling measures are implemented to stabilize the HDB resale market and provide additional financial support to homebuyers.
Let’s break down what these changes mean for you and how they might impact your home-buying journey.
Increased in Enhance Housing Grants (EHG), for Lower and Middle-Income Singaporeans
If you are a first-time applicant, you may apply for the (EHG) up to $120,000 to help with your new or resale flat purchase or a couple comprising a first-timer and second-timer may qualify for an EHG (Singles) of up to $60,000.
The Updated Measure:
The Enhanced Housing Grant (EHG) has been increased from $80,000 to $120,000 for married couples. While singles can now receive up to $60,000 in EHG, which is double the previous limit of $30,000.
(Note: Proximity Housing Grant and CPF Housing Grant remain unchanged)
Grants are issued based on per-household income, the lesser the combined income, the more grants one will receive. Refer to HDB to read more about EHG and check your eligibility.
Here’s the EHG table based on combine household ceiling:
| Income Ceiling | EHG Grant (From Aug 2024) |
|---|---|
| $0-$1,500 | $120,000 |
| $1,500 – $2,000 | $110,000 |
| $2,001 – $2,500 | $105,000 |
| $2,501 – $3,000 | $95,000 |
| $3,001 – $3,500 | $90,000 |
| $3,501 – $4,000 | $80,000 |
| $4,001 – $4,500 | $70,000 |
| $4,501 – $5,000 | $65,000 |
| $5,001 – $5,500 | $55,000 |
| $5,501 – $6,000 | $50,000 |
| $6,001 – $6,500 | $40,000 |
| $6,501 – $7,000 | $30,000 |
| $7,001 – $7,500 | $25,000 |
| $7,501 – $8,000 | $20,000 |
| $8,001 – $8,500 | $10,000 |
| $8,501 – $9,000 | $5,000 |
While these changes are positive, it’s important to keep in mind that the increased EHG could potentially drive up demand and prices for lower-priced HDB flats.
Ultimately, I believe the main aim of these new cooling measures is to make homeownership more accessible for lower- and middle-income Singaporeans.
Stricter borrowing limits for HDB loans
The Updated Measure:
Previously, HDB loans had a Loan To Value (LTV) ratio of 80%. Now, the LTV is reduced to 75%.
| What is LTV? | LTV ratio is the amount that you are allowed to borrow to finance your home |
| HDB Loan LTV | Up to 75% of the purchase price / property value |
| Bank Loan LTV | Up to 75% of the purchase price/property value |
Example: If you’re buying a flat worth $500,000 and the LTV is 75%, you can borrow a maximum of $375,000. The remaining $125,000 must be covered by your own funds, such as cash or Central Provident Fund (CPF) savings.
Important factors affecting LTV:
- Property type: The LTV may vary depending on whether the property is a resale flat, a new HDB launch, or a private property.
- Loan quantum: The higher the loan amount, the lower the LTV may be.
- Your financial profile: Your income, credit score, and other financial factors can influence the LTV you qualify for.
(Note: For private bank loans, it remains the same at 75%, with no changes)
This loan curb will more likely impact the resale HDB market than the BTO market as BTO flats valuation is pretty much standardised while resale flats prices may be different from actual valuation.
Usually, resale flats cost way more than BTO flats. For example, a 5 room flat in Woodlands near MRT could priced up to $700,000 while a BTO is around $412,000 (before grant).
Resale
| Resale Flat Price | $700,000 |
| Max Loan (75%) | ($525,000) |
| Downpayment (Cash or CPF) | $175,000 |
BTO
| BTO Flat Price (Before Grant) | $412,000 |
| Max Loan (75%) | $309,000 |
| Downpayment (Cash or CPF) | $103,000 |
The downpayment for HDB flats can still be offset with eligible grants, potentially reducing the out-of-pocket costs for buyers.
Ultimately, these stricter loan restrictions could encourage a shift towards new BTO flats, given their potential cost savings and grant benefits.
Navigating the real estate market can be stressful. We’re here to listen, understand, and guide you through every step of the process.
If you’re reading this and are uncertain about your next move—whether to buy, sell, or hold off drop us a message for a consultation and customized strategic plan tailored to your unique situation.
VIT Real Estate 