You probably know that currently, an income ceiling of 14,000 dollars applies to the purchase of new BTO flats. It was increased from the previous 12,000 dollars in 2019 but a new proposal could lead to further changes.
Will the income ceiling ever disappear? It would, if a proposal by Ang Mo Kio GRC Member of Parliament Gan Thiam Poh gets accepted.
Saying Goodbye to the Income Ceiling?
Many first-time buyers currently fail qualifying for a loan due to the income ceiling. According to Gan, this causes serious frustration and disappointment among many young couples that are looking forward to getting their first home together.
According to Gan, BTO flats are “an integral part of the Singaporean dream.” He said that many of the couples that do not qualify for a loan can afford resale or private flats. Still, their preference and their first choice remains a BTO apartment.
There are several reasons why HDB properties maintain their popularity.
The current financial situation and the uncertainty stemming from the Covid-19 economic slowdown both contribute to many people being worried about their jobs and their income. Hence, going all out to buy a private property is not seen as an attractive option for young people who are just starting to build their future life.
Changes in the Demand for HDB Properties
Gan also described a changing need for properties that could potentially affect the way the HDB is doing planning for future projects.
It’s become clear that many people will have to switch to a work from home model (at least partially). Many companies plan to maintain such a model of work even after the end of the coronavirus pandemic.
Hence, many young professionals are starting to look for larger flats that can accommodate the creation of a home office or a study.
According to Gan, HDB will have to focus more on larger flats – four and five-room properties over smaller apartments. These types of larger apartments are gaining popularity among first-time buyers and the demand could soon exceed the supply.
Changing realities are pushing for the redesigning and expansion of living spaces. The government could help society by accounting for such phenomena and developing residential projects that could account for most needs of the potential new flat inhabitants.
Statistics about the latest sales exercise from August 2020 are supportive of such theories.
Based on application numbers, the overall application rate for five-room flats is the highest, especially among first-time buyers. Expensive estates like Kebun Bahru are particularly high in demand, regardless of the relatively high prices of properties there (571,000 dollars for a five-room apartment and 423,000 dollars for a four-room flat).
The favourable location of the project and the spaciousness of the bigger flats seemed to counteract the highest prices. Hence, expensive properties are the ones that are most in demand (contrary to common financial logic).
According to real estate professionals, the largest flats have been the ones to garner the most buyer interest since the beginning of 2020. The application rates for five-room flats were higher than those for three-room and four-room flats across all of the HDB estates during the August 2020 exercise.
Longer Wait Periods for BTO Flat Buyers
The news for the high demand and the popularity of five-room flats come in the middle of concerns pertaining to project completion deadlines.
Recent reports suggest that a number of projects in the August sales exercise may take up to five years to complete due to the safety measures introduced to counter Covid-19.
According to HDB information, buyers interested in the UrbanVille Woodlands project are the ones that will have to wait the longest – approximately 62 months for the completion of their residential properties.
In the middle of August 2020, National Development Minister Desmond Lee acknowledged that many HDB projects are taking longer than anticipated to complete. Since such delays are of obvious concern for buyers, the minister has communicated with HDB about the ways in which construction works could be sped up to compensate for the Covid-19 related delays.
At the same time, the minister noted that extensive speed ups would not be possible. Apart from having to consider completion deadlines, it is also important to put emphasis on the quality and the safety of the construction works. To do so, many processes cannot be rushed.
According to the minister, those with urgent housing needs right now should consider the acquisition of a flat within the resale market. First-time buyers are entitled to housing grants of up to 160,000 dollars, which will give them better opportunities to get a good property.
In a recent HDB statement, potential buyers were advised to take project completion estimates into account before submitting an application. A total of 7,862 properties across 11 housing projects were offered for sale in August 2020.
The next sales launch is scheduled for November 2020 when 5,770 flats will once again be offered for sale.
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