6 percentage point reduction in CPF housing withdrawal Limit from Jan 1

The CPF housing withdrawal limit for buying houses will be reduced by six percentage points from 1 Jan 2008.

It will be cut to 120% of the valuation limit, down from 126%.

The CPF housing withdrawal limit is being reduced to ensure that Singaporeans have enough savings when they retire and also for health care.

It was introduced in 2002 – at 150% of the valuation limit.

Analysts said the reduction is unlikely to have much impact for buyers and sellers.

“While it does result in lesser CPF to be used for buy housing, the impact on the market is not significant. But it does make people a little bit more careful when it comes to calculations over the long term,” said Eugene Lim, Assistant VP, ERA Realty Network.

“The impact on the mid-tier and high-end market is likely to be very limited because home buyers in this segment rely very little on CPF financing,” said Nicholas Mak, Director of Consultancy and Research, Knight Frank.

According to analysts, it’s hard to predict if prices will rise or fall. But one thing they agree on is that the six percent reduction in the CPF housing withdrawal limit will not have an impact on prices.

Industry watchers remain confident that the market will continue to be healthy, although they expect the figures from the final quarter of 2007 to be slightly lower.

About 70 private developments are expected to be launched in the first quarter of 2008.

“I expect the market to continue to remain healthy although the rate of growth in price appreciation and rental appreciation would probably be a bit more tapered, a bit more moderated compared to what we’ve seen one year ago,” said Mak.

However, the US sub-prime issue and the possibility of a recession in the US market are likely triggers for a slowdown in the housing sector here.

But many in the industry remain confident. – CNA /ls

Source : Channel NewsAsia – 1 Jan 2008

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