SINGAPORE: A higher income ceiling for Build-to-Order (BTO) flats and executive condominiums (ECs) is likely to have minimal impact on the HDB resale and private property market, according to market watchers.
National Development Minister Khaw Boon Wan had said in a radio interview on Tuesday (Jun 23) that changes to the income ceiling are likely to be made known in August. The income ceiling was last raised in 2011 by S$2,000 for both types of housing.
Market watchers Channel NewsAsia spoke to said they expect the income ceiling for BTO flats and ECs to be raised by a similar amount later this year.
The Government’s plans to increase the income ceiling for the purchase of BTO flats and ECs will divert some demand from the HDB resale and private property markets. Currently, households earning a gross income of more than S$10,000 cannot apply for new HDB flats, while those earning more than S$12,000 cannot buy ECs.
However, market watchers said the impact is likely to be minimal, as HDB resale flats and private homes have their merits. Compared to BTO flats, there is a shorter waiting time for HDB resale homes which are mostly located in mature estates.
One of the largest property firms in Singapore has described the move as timely, as more Singaporeans are settling down much later, and may be earning above the current limit when they apply for a BTO flat.
The demand for new HDB flats has also cooled off compared to three years ago, said PropNex Realty’s CEO Ismail Gafoor. “Three years ago, the subscription rate was about four to five times and there was a long pent-up demand.”
He added: “Today, the subscription rate is about 1.5 to two, which means most of the demand has been absorbed, and with this greater supply, opening up to a higher increment of the income ceiling is the right thing to do.”
However, another analyst is surprised at the plans to raise the income ceiling, especially at a time where prices of HDB resale flats and private homes are falling.
Colliers International’s director of research and advisory, Chia Siew Chuin, said: “We would expect the Government to raise the income ceiling over time to keep up with wages. However, perhaps certain conditions must exist first to justify the raising of the income ceiling.”
“But as of now, I would say that the market is relatively more stable compared to before, and in fact prices are slowly, gradually moderating,” Ms Chia added.
Speaking to reporters on Tuesday, Mr Khaw had said that he has received “some” requests from Singaporeans who exceeded the income limit, to apply for new HDB flats. Analysts added that public housing, as they are subsidised by the Government, should be reserved for those who really need it.
As for the two-room Flexi scheme – a result of combining the studio apartment and two-room flat schemes – Mr Ismail said the plan signals a move towards more customisation for home buyers in Singapore, in which it is flexible and caters to needs of individuals based on their age and how much they want to pay for each unit.