Khaw: Major shift to helping middle class

SINGAPORE - Why was the middle-income group targeted this time?

Mr Khaw: We started aiming at (the) lower income and smaller flats. This is a major move that we are shifting towards, going beyond the lower income and (towards) the middle income.

Actually, the middle income can afford a fourroom flat, but many complain of the high cost of living and that after paying for the flat they do not have much savings in their CPF so they take a 30- year loan.

This additional grant will help them pay their loan in 25 years, so they will have more savings in their CPF for retirement.

What is the rationale behind the 3G flats?

Mr Khaw: There were flats targeted at multi-generation families years ago but HDB stopped building them because the demand was low. (Nee Soon GRC MP) Lee Bee Wah mentioned that there were many residents who wanted such flats and we shall try it out, with the first project in Yishun. If there's a demand, we can do more.

As a social objective, we want extended families to live together, for real and not just to get a bigger flat. We want them to live together so that they can support one another - grandparents looking after grandchildren because most parents now are working couples...

Why are the new grants applicable only to non-mature estates?

Mr Khaw: Non-mature estates are a good choice because the bulk of our BTO projects are in these estates.

The land will also be more expensive in mature estates. Those who can afford (a flat in) mature estates, are not my target group.

How much will these additional grants cost the government?

Mr Khaw: It depends on the take-up rate. As this is a permanent policy and will be implemented from now on, we have to sharpen our pencils and calculate every sum and make sure that it's something that society can afford...

It cannot be just popular and something that we will regret in 10 years time. We have to do something sustainable that future generations can afford... But you'll know it's not cheap.

We are talking about millions and millions of dollars... We have to be prudent, but more importantly we are also seeking for Singaporeans to be prudent. Please do not overstretch, please do not assume that today's interest rate will stay forever and overstretch yourself because you may regret and that will be very troublesome.

WHAT IT MEANS

Most of the measures are targeted at BTO buyers, but there will be "some impact" on the resale market as well, acknowledged Minister of National Development Khaw Boon Wan. More than 90 per cent of firsttimers have shifted their sights to BTO flats and the others may now be tempted, he said.

Property analysts agreed that the resale market will be dampened because of on Tuesday's measures.

Suntec Real Estate Consultants research head Colin Tan said: "Although cash over valuation and volume transactions have decreased, prices in the resale market have not come down.

"By discouraging people from overconsumption by decreasing the loan tenure, and giving additional grants, HDB is trying to take away the demand from the resale market and stabilise prices."

But SLP International head of research Nicholas Mak thinks that the number of families that will move away from the resale market will depend on the number of BTO flats that can be supplied in a given period.

"The extent of the impact will also depend on the attractiveness of the BTO projects such as their locations and proximity to the town centre and MRT stations," he said.

Mr Mak added that the new restrictions on PRs could result in a fall of transactions by 15 to 25 per cent in the next one to two quarters.

New measures

Income ceiling raised to $6,500 for Special CPF housing grants

The income ceiling for households to qualify for the Special CPF Housing Grant (SHG) will be raised from $2,250 to $6,500.

The SHG, which comes up to $20,000 for those earning not more than $5,000 a month, will also be extended to four-room flats in non-mature estates, instead of just two-room and three-room flats.

The income ceiling for singles buying a two-room flat will also be raised from $1,125 to $3,250.

New PRs have to wait 3 years to buy resale HDB flats

The change applies to resale applications received on or after 5.30pm on Tuesday.

Before the change, PRs could buy resale HDB flats as soon as they got PR status. PRs are allowed to buy only resale flats.

They make up 20 per cent of buyers in the resale market, said Mr Nicholas Mak, executive director, Research & Consultancy Department, SLP International Property Consultants.

There were 51,000 Housing Board flats fully owned by permanent residents as of end June, representing 6 per cent of all HDB flats, said Mr Khaw in a written parliamentary reply this month.

Shorter mortgage loan tenure

The maximum tenure for HDB housing loans will be reduced from 30 years to 25 years.

The Mortgage Servicing Ratio limit will be reduced from 35 per cent to 30 per cent of the borrower's gross monthly income These are in line with the Monetary Authority of Singapore's rules to encourage financial prudence.

Pilot project for 3G flats

A pilot project of three generation (3G) flats, with four bedrooms and three bathrooms (two of them en suite), with a floor area of about 115 sqm will be offered in Yishun.

A typical five-room flat is about 110 sqm.

The multi-generation scheme, which gives priority to parents applying for studio apartments or two-room flats in the same estate as their married child, will also be enhanced. Parents can now apply for a three-room flat.

$15,000 upgrade grant

Families in subsidised two-room flats in non-mature estates will get a $15,000 grant credited to their CPF Ordinary Account when they upgrade to a three-room flat under the Step-up CPF Housing Grant.

This will help them to offset the resale levy, which is meant to reduce the subsidy on the second subsidised flat and maintain a fair allocation between first and secondtimers.

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