SINGAPORE - The new housing subsidies to help first-timers buy bigger homes will cost the Government at least $150 million a year, National Development Minister Khaw Boon Wan revealed on Wednesday.
This raises the amount to be spent on grants for new flats from about $290 million to over $440 million a year, a sum which includes both the Additional Housing Grant and the Special Housing Grant (SHG).
On Tuesday, Mr Khaw announced that the SHG would be given to families and joint singles earning up to $6,500 a month who want to buy new four-room or smaller flats.
These households can now get up to $20,000 a month. The Central Provident Fund grant was previously only for families earning up to $2,250 who bought three-room or smaller flats in non-mature estates.
In a Facebook post on Wednesday, Mr Khaw noted that this was "not a trivial policy shift, but a significant one made after careful consideration".
The $150 million figure, which he gave in the same post, means that at least 7,500 households are expected to benefit from the expanded SHG - assuming each household takes up the full $20,000 grant.
This forms about a third of the roughly 20,000 new Build-To- Order flats being rolled out on average each year, since last year.
More than five in 10 resident households here earn $6,500 and below, and many of them could be eligible for the grant.
Mr Khaw told reporters on Tuesday that he expects the take-up rate for the SHG to increase, because "every year, more families will come up".
DBS economist Irvin Seah said the $150 million sum was "a considerable amount of money which highlights the Government's commitment to make housing affordable".
The policy on its own would not strain the Government's overall fiscal position, he added, but could generate significant bills when taken alongside other recent measures to strengthen Singapore's social safety net.
"Eventually, the money will have to come from somewhere. In the longer term, the Government may have to find other sources of tax revenue or tax higher earners more," said Mr Seah.
Separately, Mr Khaw also noted that "HDB now is a huge issuer of bonds", the largest after the Monetary Authority of Singapore.
The Housing Board issued $3.61 billion worth of bonds during its 2011/2012 financial year.
It also finances its operations through other means such as government grants and mortgage financing loans.
Get a copy of The Straits Times or go to straitstimes.com for more stories.