Buy resale flat near parents? Financial help is key: Experts

Buy resale flat near parents? Financial help is key: Experts
The price slide in private homes was led by those in the central area, which dropped 1.9 per cent in January after falling 1.6 per cent in December. Non-central units saw a 1.4 per cent decline in January, far more than the 0.5 per cent drop in December.

FINANCIAL support is the main way to help people who want to get a resale Housing Board flat near their parents, said experts.

This could mean giving a higher resale grant, or allowing more buyers to qualify for it.

As part of efforts to encourage extended families to live close together, the Government is studying whether such resale buyers can get more help, National Development Minister Khaw Boon Wan said last Friday.

Currently, there is the Higher-Tier CPF Housing Grant for first-timers who are buying a resale flat with, or close to, parents or married children.

Experts said that unlike new flats, which allow for quotas or different ballot chances, the resale market has just one main possibility for intervention: financial help.

Increasing the Higher-Tier Grant is an obvious move as resale prices have risen, said PropNex Realty chief executive officer Mohamed Ismail Gafoor.

Chris International director Chris Koh noted that the grant used to be $50,000, but was reduced to $45,000 and then to the current $40,000.

This is only $10,000 more than the usual grant for first-time resale buyers.

Said Mr Koh: "If we restore the grant back to $45,000 or $50,000, the difference is substantial and will surely encourage more to buy near their parents or married children."

To prevent abuse, a larger grant could come with strings attached, suggested R'ST Research director Ong Kah Seng.

Buyers could have to live in their flat for up to eight or 10 years before selling it again, instead of the current five years.

The grant could also be made available to more buyers.

It is currently for resale flat buyers whose parents or married children live in the same town or within 2km. This eligible distance could be increased, said experts.

"I think there is no need for young couples to live very near their parents because sometimes the flats might be too costly for them, especially in mature estates," said Mr Ong.

A smaller grant could even be made available for resale flats in the same region, he added.

Help could also be given to non-first-timers who want to move close to their families, said Mr Koh. "If they have never taken the Higher-Tier Grant before, we can extend to them a $10,000 grant - after all, it is the difference with the normal grant."

But Century21 chief executive officer Ku Swee Yong is sceptical as to whether more help is truly needed. "If we consider the ease and convenience of the extended family support, families should not need financial incentives to move near to parents," he said.

This article was first published on June 23, 2015.
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