The Ministry of National Development (MND) and Housing Development Board (HDB) have recently introduced measures to address the HDB resale market and offer additional assistance to first-time homebuyers in the lower-to-middle-income bracket.
Starting from midnight on August 20, there will be a 5% reduction in the loan-to-value (LTV) limit for HDB housing loans, bringing it down from 80% to 75%. The LTV limit for HDB loans has been adjusted to match the 75% limit set by financial institutions.
The updated HDB LTV limit will be effective for resale applications received by HDB on or after August 20 and for BTO applications for the October 2024 BTO exercise onwards.
As stated in the release, the impact of the lower LTV limit will be minimal for first-time home buyers, particularly those with lower incomes, thanks to substantial housing grants they receive.
In the National Day Rally 2024, Prime Minister Lawrence Wong shared the government’s plan to raise the quantum of the Enhanced CPF Housing Grant (EHG) for both new and resale flats. This initiative aims to provide greater support to first-time home buyers. The EHG will be increased as follows: For eligible first-timer families, the maximum grant amount will be raised from $80,000 to $120,000, providing up to $40,000 in additional funds. For eligible first-timer singles, the maximum grant amount will be raised from $40,000 to $60,000, providing up to $20,000 in additional funds.
Introduced in September 2019, the EHG is a grant designed to provide extra assistance to lower-to-middle-income households purchasing new or resale flats as their first home.
Previous rounds of measures to cool the market and the increased supply of BTO flats have played a role in tempering the rise in HDB resale prices. In 2023, prices grew by 4.9%, a notable decrease from the 10.4% growth seen in 2022. Nevertheless, resale prices saw a significant increase of over 4% during the first half of 2024. This surge was primarily fuelled by robust and widespread demand, coupled with a slight scarcity in supply due to fewer flats reaching their Minimum Occupation Period this year.
The government keeps a close watch on the HDB resale market, according to the announcement. “Considering the ongoing, robust, widespread demand for HDB resale flats, these measures will contribute to market stabilisation and promote responsible borrowing, ultimately enhancing housing affordability for first-time home buyers in the lower-to-middle income bracket.”
