Good news for new home buyers: Analysts

First-time home buyers will welcome the call to raise the income ceiling to qualify for new HDB flats, property analysts said yesterday, a move which will also benefit the sandwiched class.

National Development Minister Mah Bow Tan has hinted that the income ceiling for new build-to-order (BTO) flats could be raised to S$10,000 – from the current S$8,000 – after the General Election.

Analysts welcome the plans to raise the income ceiling.

Calling the move an overdue one, Mr Mohamed Ismail, chief executive of property company PropNex, said the public has sent a very strong signal.

“I think the sandwiched class has indicated: ‘Hey, the ceiling at S$8,000 we are neither here nor there’ and especially now … the younger generations are getting married much later,” he said.

Currently, those earning above S$10,000 a month can only buy flats under the Design, Build and Sell Scheme (DBSS) and Executive Condominiums (ECs). They can also buy from the resale market or purchase private apartments.

The key executive officer of ERA Realty Network, Mr Eugene Lim, said: “The gripe with this class is that they can’t buy the most affordable housing in Singapore and they are forced to buy at a higher price which puts a strain on them financially. I think this group of people will be very happy with this new policy.”

Analysts say the higher income ceiling for new flats is not likely to have a significant impact on the overall property market – given that the sandwiched class is only a small part of the property market. But some say the resale HDB market could still be marginally hit.

Mr Lim said: “We’ll probably see some of the buyers who currently buy from the resale market moving to BTO flats because there’s always a preference for new over old. “When you buy a resale flat, you’re buying old flats but at higher prices. Now you can buy new flats at subsidised prices.”

First-time BTO flat buyers will probably make adjustments to their plans. Those buying BTO flats have to factor in the three-year construction period.

Some analysts say they do not see any immediate impact on property prices in the HDB resale market, saying that there is an eight-year gap before any of the BTO flats become eligible for resale.

This year, the HDB is looking to build around 22,000 flats under the BTO scheme – the largest supply in recent years.

The review of the income ceiling is likely to be conducted after the polls and will be completed within six months, National Development Minister Mr Mah said.

Source : Today – 9 May 2011

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