(SINGAPORE) Home seekers had much to cheer about yesterday as the Government announced an increase in the income ceiling for HDB flats to $10,000 from $8,000, followed by a raise in the income ceiling for executive condominiums (ECs) to $12,000 from $10,000.
It also kept a bumper supply of new flats in the pipeline, promising to launch another 25,000 build-to-order (BTO) units next year.
The higher income ceilings mean that more people can now qualify for new flats sold directly by HDB (which are typically cheaper than resale flats) or for ECs (a hybrid of public and private housing). 'This is something that people have been waiting for,' said PropNex chief executive Mohamed Ismail. 'It will be warmly welcomed, especially by those couples who are at the crossroads right now.'
But the good news for buyers was perhaps a mixed report for flat sellers and some private developers. As more could turn to BTO flats and ECs, the impact on demand for resale flats and mass market condominiums is now up in the air.
Prime Minister Lee Hsien Loong announced the higher income ceilings in his National Day Rally speech yesterday evening, to applause from the audience.
Previously, a couple's combined monthly income could not cross $8,000 if they wanted to buy a new flat from HDB.
But there are more couples earning just below $8,000 now - people are getting married later when they are at more senior positions in their careers, and there are also more women working. 'They are quite worried,' Mr Lee said. 'Because if you are earning $7,500 and you get a promotion, you are not sure whether that's good news or bad news.'
The Government is expecting the higher income ceiling to boost takers for BTO flats and is preparing to roll out 25,000 such units next year - a number similar to this year's.
Earlier in May, the Government had indicated that a review of the HDB income ceiling was on the way. In the weeks leading to the General Election that month, the affordability of public housing had emerged as a hot topic.
Since then, industry watchers have been speculating about the extent of the changes and several were right on the money. 'The market has already taken note,' said Credo Real Estate executive director Ong Teck Hui.
Some observers expect the higher income ceiling for ECs to siphon off some demand for mass market condominiums. There will be more competition, said ERA Realty key executive officer Eugene Lim.
Jones Lang LaSalle head of research and consultancy for Singapore Chua Yang Liang estimates that annual new housing demand in the private market could drop by as much as 5-15 per cent, or around 700-2,000 units. Nevertheless, the average private residential property price islandwide should be able to grow at 0-1.5 per cent per quarter, unless global uncertainties douse buying sentiments further, he said.
As for the HDB market, Credo's Mr Ong expects the higher HDB income ceiling to draw some demand away from resale flats, but he does not think the impact will be major. 'I think at this point in time, we are more concerned about the recent financial market turmoil and the changes in the economic outlook and how it's going to impact demand later on,' he said.
Global Property Strategic Alliance chief executive Jeffrey Hong was also confident that resale flats will remain attractive because of their location in mature estates. 'I don't see a great drop' in demand, he said.
Rental flats were also under the spotlight yesterday, with Mr Lee announcing an increase in their supply. The government will add 7,000 rental units in the next two years, and postpone the demolition of some blocks under the Selective En-Bloc Redevelopment Scheme so that they can be used as temporary rental units.
The moves will help cut waiting time for rental flats but the government also has to address the deeper social issues faced by households needing such flats, he said.
'Overall, I promise you, we will keep housing available and affordable for Singaporeans,' Mr Lee said.