Qualifying income ceilings for public housing raised

The government will raise the qualifying income ceilings of households for HDB’s Build-To-Order (BTO) flats and Executive Condos (EC), said Prime Minister Lee Hsien Loong in his National Day Rally speech on Sunday evening.

The qualifying income ceilings of households for BTO flats will be increased from the current S$8,000 to S$10,000, and for ECs from the current S$10,000 to S$12,000.

Prime Minister Lee said HDB will also build another 25,000 BTO flats next year to meet demand and keep prices of new flats stable and affordable.

The pool of rental flats will also expand. About 7,000 new units will be built by 2013, and to create temporary rental units, the government will also postpone the demolition of old housing blocks under the Selective En-bloc Redevelopment Scheme (SERS).

Mr Lee said the moves will ease the waiting time for needy Singaporeans who require rental flats. But beyond adding supply, Mr Lee said the government will need to address the deeper social issues behind the demand for rental flats.

The prime minister also made the commitment to keep housing available and affordable for Singaporeans.

To meet demand, the HDB is already building 25,000 BTO flats this year. And this has had some effect, with each new project seeing fewer applicants.

Still, many young couples, especially those earning just under the qualifying income ceiling of $8,000 a month, are concerned. They worry that with their incomes on the rise, they will breach the ceiling before they get their first flat.

Hence, the monthly income cap will be raised from the current S$8,000 to S$10,000.

For Executive Condominiums, the ceiling will be raised from the current S$10,000 to S$12,000.

“We are bringing more people into the HDB net, and you don’t have to worry so much. But the result of bringing more people into the HDB net is that there’s going to be more demand for the BTO flats,” said Prime Minister Lee.

Hence next year, HDB will be building another 25,000 new BTO flats.

Analysts said the measures will ease the concerns of many homebuyers, but they wonder if further reviews of income criteria are required.

“Much of the policies, like the CPF housing grant, are exactly the same as the (income ceiling) policy to be eligible for a brand new flat. So if there is an amendment now with the (income ceiling) for brand new flats, my question is: will there also be an amendment to the resale market policies, for example, the CPF housing grant?” asked Chris Koh, director of Dennis Wee Group.

Another policy that also has the S$8,000 income ceiling is the HDB housing loan.

But Mr Koh said that is unlikely to be changed as the concessionary interest rate loan is aimed at helping those who need a loan badly and who have a lower household income. Furthermore, raising the cap will likely drive more people to take up HDB loans.

“My view will be, what will banks say about it, because they’ll lose this potential group of home loans,” he said.

Source : Channel NewsAsia – 14 Aug 2011

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