The new Minister for National Development, Mr Lawrence Wong later commented in Oct 2015 that supply of new HDB flats might increase in 2016 to cope with the anticipated increase in demand resulting from the higher income ceiling.
This higher income ceiling means that more people can qualify for new HDB flats and ECs, thereby possibly diverting demand from the resale market.
Is this another nail in the coffin for the resale market especially after transaction volume has stabilised?
I would think no.
There are three positives going for the HDB resale market.
First, the newly announced Proximity Housing Grant (PHG) of $20,000. This will help Singaporeans to buy a resale flat near their parents or married child. This grant is on top of the basic CPF Housing Grant up to $30,000 and Additional CPF Housing Grant up to $40,000. Depending on their monthly household income, eligible Singaporeans will get a total grant up to $90,000 (minimum $20,000) to help them to offset the value of the resale HDB flat. This will nudge some demand over to the resale market.
Secondly, there will be more residential units completing in the next few years. In 2016, there are more than 50,000 units. An estimated 30% to 40% of these are HDB upgraders which mean they have to sell their existing flats. Buyers who want a flat immediately will have choices. With the soft resale market, sellers will be more willing to negotiate and the grants given by the Government will help with the purchase. Transactions in the resale market could exceed 20,000 in 2016.
Source:
MND
Thirdly, the re-entry of permanent residents (PRs) into the HDB resale market. The rule barring new PRs from buying resale HDB flats came in August 2013. In August 2016, some of these PRs will be eligible to buy resale HDB flats. And more PRs will be eligible in the coming years. This will give a boost to demand in the resale market.
Source:
ICA / Real Property Advisory
