Helping young ones own homes

It's early Saturday morning and Mr Toh Yan Say is jubilant with the news - the latest cooling measures for the property market.

Yes. Jubilant.

This excited uncle at a kopitiam in Toa Payoh flips the pages of the newspaper in front of him, and points out: "See, this makes it easier for my son to finally buy his home."

He is, of course, referring to the new property measures that were announced by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam and National Development Minister Khaw Boon Wan at a quickly-assembled press conference on Friday evening.

The new measures that took effect on Saturday are part of the Government's efforts to cool both the public and private housing markets - its seventh round since 2009.

Mr Toh, 78, a retiree who occasionally helps out at night market stalls, shares how his son has been home-hunting for nearly three years.

His son, 30, an interior designer, is getting married in December 2014.

"You know, my son and his fiancee (also 30 and a private secretary) have not been so lucky," laments Mr Toh.

"It's either that the flats are too expensive or the units that they are eyeing are snapped up."

The new measures, he believes, will help to mop up the market of speculators.

"It's a definitely a good move. These people, especially the investors, are too rich.

When they jump in for a share (of the pie), there is nothing left for the young to start off with," he says.

Miss Goh Ling Ling, 28, a cashier, is another happy flat-hunter.

She and her fiance, also 28, are looking for their new home and finds some of the prices in previous units too high.

"With these new measures in place, the prices will definitely come down, and we can probably afford a unit finally," she says.

Her dream home is a five-room HDB flat. She reckons that with their total monthly income of $6,500 - her fiance is a teacher - they can "likely afford it".

Madam Agnes Wong, 60, whose daughter is a first-time buyer, is also pleased with the new measures announced.

She says: "I was told that it's essentially to weed out the investors. This also means that some sellers may bring down their prices as they fear that the Government may introduce more strict measures.

"It's definitely important because people like us really need a home."

Mr Samuel Pay, 44, a business development director at Bestlink Realty, feels that the new measures, which have been called in to curb speculation, means good news for genuine buyers.

He says: "You can expect prices to drop and that will make it easier for them to become a home owner."

Well, prices coming down may be a good reason to celebrate, but this heartland aunty suspects that the full impact of these measures, or the rest of those related to especially HDB-flat buying, have yet to filter down completely to many of the heartlanders.

Particularly the move to stem over-borrowing.

Individuals who buy HDB flats will now only be allowed to use only 30 to 35 per cent of their gross monthly income to repay loans taken from HDB or commercial financial institutions.

To be specific: If they take a loan from HDB, they can use 35 per cent of their income to service their mortgage. If they take a loan from a bank, this percentage drops to 30 per cent.

The Straits Times cited an example in a report on Saturday, where a buyer takes up a 30-year loan for a $700,000 flat.

The loan is assumed to be 80 per cent of the flat's value, and the interest rate pegged at 1.5 per cent.

Based on a 40 per cent mortgage servicing ratio (MSR) in the past, he would need to have a gross monthly income of $4,830.

For the same property, now at a 30 per cent ratio, he would need to make $6,440 a month.

Previously, the MSR could be as high as 60 per cent in some loan applications. This cap means that even first-time buyers can be hit. And that they need to look at what they can afford.

Aspirations will be impacted.

When we point this out to Mr Toh, he takes several minutes to digest the detail, then says: "Oh... this means that maybe my son will have to do the sums carefully and settle for a smaller unit?

The jubilation turns. He is dismayed.

"Aiyoh, he was actually hoping to get an executive condominium."

When this correspondent bought her executive apartment in Pasir Ris, there was none of these measures. And I would not have been able to buy it with the current MSR caps.

We bought it so that our potential family could grow up in it... and we have.

Don't get me wrong, I am all for prudence and financial planning and stringent rules.

Mr Yeoh Ah Beng, 69, a retiree, says it best: "Wear the shoe that fits and not one that is too big. So in some ways, it's good to rein in unrealistic dreams."

But aspirations are aspirations. Young families will have aspirations like I had when I was starting out.

And these will need to be managed.

Oh, and a parting note: This heartland aunty was quietly amused when she was walking Ground Zero on Saturday morning.

Many approached to ask me a few questions of their own about the new slew of measures, and how they would be affected.

Among them was Mr Rahmat Said, 55, a driver. He applauds the move: "It's good lah. This latest round of measures help to give some hope to many of our younger ones, who lament that they find it hard to become home owners."

But then, he wonders aloud cheekily if the announcement "seems too much of a coincidence?"

He says: "The by-election is just round the corner, isn't it?"