The Government unveiled a slew of property cooling measures on Thursday (29 Sep 2022), aimed at moderating demand and ensuring prudent borrowing amid rising interest rates. With million dollar HDB resale flats transacting almost every other day this year and in estates unheard of such as Yishun, Woodlands and Punggol, the Government doesn’t want to wait until the number surpasses 2021 (2020: 82, 2021: 259, 1H22: 8M22: 231).
We think that the measure with the most impact is the 15-month wait-out period which starts counting from the sale completion of the private property. This is targeted at private property owners who intend to cash out from their private properties and downgrade to a HDB resale flat. While some private property sellers may have genuine issues to do so, the escalating resale flat prices and first-time buyers of resale flats being squeezed out from the market are far more pressing problems that have to be fixed.
Will This Be The Peak For HDB Resale Flat Prices?
The National Development Minister, Desmond Lee, commented that the 15-month wait-out period imposed on current and former private property owners will moderate demand for Housing Board resale flats and keep them affordable, especially for first-time home buyers.
The sharp increase in resale flat prices in a short span of less than 3 years has resulted in a new peak surpassing that of 2013. With HDB in possession of the trove of data, it is without doubt that the cooling measure is designed to reduce demand so that first timers have greater access to the resale flat supply especially with generous CPF housing grants. It is just how HDB is supposed to be, affordable public housing for Singaporeans.
Q1: I have sold my condo and exercised the OTP to purchase a resale HDB before the cooling measures were announced but I have not submitted the resale application, am I affected by the wait- out period of 15 months?
A1: Yes, the wait-out period applies to private home downgraders who submit the complete application – both the buyer’s and seller’s portions from Sep 30. In this case, the clause in the option to purchase may be invoked – if HDB’s approval for the sale and purchase of the flat is not obtained or revoked, and it is not due to the seller’s or buyer’s fault, the seller has to refund the buyer the fees.
The 15-month wait-out period will not apply to seniors and their spouses, both of whom must be aged 55 and above, if they are selling their private property to buy a four-room or smaller resale flat.
Q2: My husband is 56 years old and I am 48 years old. We intend to downgrade from a private property, will the 15-month wait-out period apply to us?
A2: Yes, the 15-month wait-out period will apply in this case. In order for the wait-out period to be waived, both owners have to be at least 55 years old when moving from a private property to a four-room or smaller resale flat. However, if you wish to move to a five-room or larger resale flat, such as an executive apartment, executive maisonette, or jumbo flat, the 15-month wait-out period applies.
Q3: Will successful applicants in the earlier Build-To-Order (BTO) launches be affected by the new cooling measures?
Q3: No, the LTV limit for HDB housing loans will remain at 85% in the earlier launches. The applicants who have not applied for an HDB loan eligibility letter will also not be subject to the new interest rate floor of 3% for computing the housing loan amount.
The new measures will take effect from the BTO launches in November 2022 onwards.