New Flats Have Remained Affordable: HDB

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HDB gave this update in a media statement on Sunday. Eligible first-time buyers currently enjoy up to S$80,000 in housing grants, comprising the AHG of up to S$40,000 and the SHG, also up to S$40,000. There has also been change to income ceiling for applicants of executive condo recently. Upcoming executive condo include The Visionaire EC , Wandervale EC and Parc Life EC while existing ones include The Terrace EC, Waterwoods EC, Signature EC at Yishun and Brownstone EC.

A round of enhancements to the SHG announced during last year's National Day Rally took effect from November's Build-To-Order (BTO) and Sale of Balance Flats exercises. The SHG has now been extended to about 6,500 households earning up to S$8,500 - up from the previous income ceiling of S$6,500 - to buy new flats in non-mature estates.

All eligible families also receive a higher SHG amount, in some cases up to S$20,000 more, HDB said. The income ceiling for singles as well as the maximum SHG amount they receive are half of those of households.

The number of recipients for the AHG breached 13,000 in 2011 and peaked at 13,325 in 2012 before tapering off at 8,098 between January and November 2015. Key Executive Officer of PropNex Lim Yong Hock explained: "For 2011, HDB had launched the largest number of BTOs - up to 28,000 units. And in 2012, they launched about 25,000 units. With the large number of BTO launches and with the pent-up demand, obviously there are more people who will be applying and obviously the number of people applying for the grant would be highest."

He pointed out that with easing demand over the years, especially in the last two years, the number of applicants for the grant and the number of people applying for BTO flats has also dropped.

For the SHG, close to 250 households received help in the first year that it was introduced back in 2011. Changes in July 2013 to raise the income ceiling for the grant and to extend it to 4-room flats saw the number soar to 10,095 in 2014.

NEW HOUSING REMAINS AFFORDABLE

Overall, new HDB flats have remained affordable, the housing board said. In 2014, first-time home buyers used less than a quarter of their monthly income on average to pay for their housing loans, below international affordability benchmarks of 30 to 35 per cent, HDB said.

It added that about 80 per cent of the first-time new flat buyers also service their monthly installment using only their CPF savings, with no cash outlay required.

One concern that has been raised is whether there is a need to adjust the income range to qualify for the maximum amount of subsidies, in order to keep apace with flat prices, Mr Lim said. Households must earn less than S$1,500 currently to be eligible for the maximum amount of grants.

Said Mr Lim: "With the introduction of both grants, it does help many homeowners fulfill their housing dreams. But what is the other issue we're facing right now? The income ceiling has increased over the years, but actually the minimum income has not been adjusted.

"For example, somebody who was making S$1,400 five years ago ... If his income today is S$1,600, he is not eligible for the maximum Additional CPF Housing Grant and Special CPF Housing Grant. In fact, his increase doesn't make him any richer. But that increase is not sufficient for him to buy a better or similar flat - because prices of flats have gone up over the years."

Mr Alex Yam, chairman of the Government Parliamentary Committee for National Development, agreed that the issue could be examined further down the road if needed. "At the moment, if you're applying for a 2-room under the BTO or flexi-scheme, you're likely to already qualify for the maximum amount of grants without any further adjustments to income ceiling. But we can't say the same for the future," said the Member of Parliament for Marsiling-Yew Tee GRC.

"Somewhere downstream, incomes may increase somewhat across the board. That is when HDB will have to look at this in greater detail, and think about whether we should increase the income ceiling at the lower end so that they have greater affordability for their flats, despite marginal increases in income," he added.

More than 80 per cent of Singapore’s resident population are housed in more than 900,000 flats across the island and 95 per cent of them own the HDB flats they live in.
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