Tag Archives: Mah Bow Tan

Apply new ceiling retrospectively

Letter from Alvin Eng

I REFER to the report, “Strike balance when reviewing HDB income ceiling” (May 31).

Indeed, it is important that the Housing and Development Board (HDB) strike a balance when recalibrating the income ceiling.

Just as setting it too low would render the exercise cosmetic, setting it too high could result in a surge in housing demand which could, in turn, push up prices, thereby neutralising the move.

What the article omitted, however, is the equally important need to strike a balance with respect to the timing of when the revised policy would be effective.

Young couples priced out of the private housing market due to the recent rally would have had to turn to buying HDB flats.

But some of them may have a combined income that just breached the existing ceiling (not unusual for two professionals who have worked a few years) and are, therefore, ineligible to buy HDB flats directly or receive the housing grant.

Thus, whilst reviewing the income ceiling, the HDB should consider retrospectively applying the new policy, say to Jan 1 this year, so as to allow this group to also benefit from the Government’s housing policy.

Source : Today – 1 Jun 2011

‘Strike balance’ when reviewing HDB income ceiling

As the Government reviews the income ceiling to qualify to buy new public housing – a move considered by some market watchers to be long overdue – property analysts cautioned that a balance would have to be struck between helping the sandwiched class and ensuring that the market could cope with an influx of new buyers.

Analysts whom Today spoke to said that a higher income ceiling of S$10,000 a month – the figure floated by former National Development Minister Mah Bow Tan when he announced the review during the General Election – would be a step in catching up with the median income of Singaporeans. The income ceiling has not changed in 17 years.

But with some couples earning a combined income of more than S$10,000 – yet still priced out of the private housing market – there is room for the ceiling to go still higher, suggested Mr Colin Tan, director and head of research and consultancy at Chesterton Suntec International.

“From the perspective of the lower-income buyers, they feel that those who earn more do not deserve it, but … they too have difficulties given that private property prices are now so much higher,” he said.

A household’s combined income now must not exceed S$8,000 a month for it to qualify to buy a new flat directly from the Housing and Development Board. The ceiling was raised to S$10,000 for the HDB’s top-tier Design, Build and Sell Scheme (DBSS) flats last year.

If the income ceiling is indeed raised to S$10,000, then the income thresholds for executive condominiums (ECs) and DBSS flats need to be reviewed too, given that their ceilings are also S$10,000, said analysts.

Mr Tan proposed that entry-level salaries could be used as a benchmark in the review before being adjusted to reflect the interests of other stakeholders.

But Mr Nicholas Mak, executive director at SLP International Property Consultants, noted that the Government would have to work out how many more flat buyers the market could realistically absorb and also approve a higher budget for the HDB.

“The higher the income ceiling is, the more buyers there will be. The Government ends up building more flats. It will need more land and it will also need to give out more subsidies to first-time buyers,” he said.

Mr Steven Tan, executive director at Orange Tee, said simply pegging the income ceiling to median income alone was not enough, especially if the rise in housing prices continued to outpace economic growth – for example, median incomes may rise by a few percentage points, while property prices increase by double digits in the same period.

But he added that reviewing the income ceiling more frequently would also be challenging, as the property price movements can often be faster than the adjustments in median income.

Nonetheless, Mr Mak felt that a review should be done once every two years.

Agreeing, Mr Colin Tan said: “Public housing is a social good, so why not allow people to gain access to it earlier so they can start families?”

Source : Today – 31 May 2011

See : Apply new ceiling retrospectively