Increased grants, more ballot chances for first-time home buyers

/ EdgeProp Singapore |
This “two-pronged approach” of increased housing grants and more ballot chances is expected to “alleviate some of the concerns of young families in getting their first home”, according to Lee Sze Teck, senior director of research at Huttons Asia. (Picture: Samuel Isaac Chua/The Edge Singapore)
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SINGAPORE (EDGEPROP) - Deputy Prime Minister and Finance Minister Lawrence Wong delivered Singapore’s Budget 2023 on Valentine’s Day. Themed “Moving forward in a new era”, it announced measures to address higher costs of living, including housing for first-time home buyers.
In the public housing market, families will receive more help when purchasing an HDB flat for the first time, whether it’s a Build-To-Order (BTO) or resale flat. The move aims to better support young couples and help them realise their housing aspirations, says Wong.
Families purchasing resale flats (four-room or smaller) for the first time will enjoy enhanced Central Provident Fund (CPF) housing grants of $80,000, up from $50,000 before. Grants will be increased to $50,000 from $40,000 previously for those looking to buy five-room flats.
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In all, eligible families will be able to receive up to $190,000 in grants when purchasing their first resale flat, says Wong.
The government will also give greater priority during BTO applications to first-time buyers with children, as well as young married couples under 40 years old, who ballot for a flat.
First-time home buyers will also receive an additional ballot for their BTO application. This will be implemented later in 2023, says Wong.
table 1 - EDGEPROP SINGAPORE
Source: HDB
While a majority of new BTO flats are already set aside for first-time families, this category of buyers is wide and covers a range of applicants. For example, they include buyers who already own a home but have not utilised housing subsidies from the government.
HDB will introduce a new sub-category of first-time BTO buyers comprising families with children, and young married couples aged 40 years and below who are buying their first home. This group will receive an additional ballot chance for their BTO applications to support them in securing their BTO flats in a more timely manner, says HDB.
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“Providing more ballot chances for those with urgent needs, like families with children and married couples below 40 years old, is a good move,” says Christine Sun, OrangeTee & Tie senior vice president of research and analytics. The increased ballot chances may see more eligible buyers applying for BTO flats, she adds. “It can also help lower- to middle-income earners own a home faster, especially if they are cash-strapped and cannot afford a resale flat.”
Giving priority to these home buyers could also help HDB reduce the rejection rate for BTO flat selection exercises, says Ismail Gafoor, CEO of PropNex Realty. HDB had said previously that the rejection rate was at 40%.
This “two-pronged approach” of increased housing grants and more ballot chances is expected to “alleviate some of the concerns of young families in getting their first home”, according to Lee Sze Teck, senior director of research at Huttons Asia.
HDB resale market - EDGEPROP SINGAPORE
The HDB resale market has seen significant price growth over the past few months, propelled by tight supply conditions and cash-rich upgraders. (Graph: HDB resale market price movement/EdgeProp Singapore)
Even singles will see some support. This group of buyers will see their CPF housing grant increase from $25,000 to $40,000 when buying a four-room or smaller flat, and from $20,000 to $25,000 when buying a five-room resale flat.
“We think this is a timely move, and the substantial increase in CPF housing grant will help flat buyers manage the cost of resale flats by lowering their downpayment or lowering the loan amount needed,” says PropNex’s Gafoor.
Although injecting more financial support to HDB resale buyers will be welcomed by eligible buyers, “the beneficial effects could be short-lived as it could result in further price inflation”, points out Nicholas Mak, head of research and consultancy at ERA Realty. “The rise in HDB resale flat prices could spill over to the private housing market.” (Find HDB flats for rent or sale with our Singapore HDB directory)
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The increase in the CPF housing grant for resale HDB could shift some of the demand from the BTO market, observes Huttons’ Lee. He has therefore raised his projections for HDB resale transaction volume to 26,000–28,000 from 24,000–26,000 before. He is also estimating resale HDB prices to increase by between 8% and 10% this year.

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