Tag Archives: National Development Board

Removing income ceiling for new HDB flats will drive up demand

Recently, National Development Minister Khaw Boon Wan floated a radical idea to remove the income ceiling for new HDB flats.

Some industry players said the suggestion would make public housing even more accessible to Singaporeans, but could raise some concerns.

Currently, the household income ceiling for new Built-to-Order flats is S$10,000 and for executive condominiums S$12,000.

Analysts said removing the income ceiling would definitely drive up demand for new HDB flats as more people would be eligible to buy them.

That, in turn, would crimp demand for entry-level private condominiums.

Apart from obvious impact on the property market, analysts said it would have implications on how the government re-distribute wealth to Singaporeans too.

DWG’s senior manager of training, research and consultancy, Lee Sze Teck, said: “Your service and conservancy charges rebate or even Workfare Income Supplement to the lower income families and all these are actually tied down to the annual value of the home.

“When you remove the income ceiling, we are talking about people who are well to do, coming into the HDB market and getting financial assistance in this way. What will be the impact on society?

“What will those needy or who are at the the lower end of the income group think of such a move?”

Source : CNA

Shoebox units may grow 70 percent over next three years

From around 2,500 units, the number of completed shoebox homes could grow to 9,700 by 2015, according to Khaw Boon Wan, Minister for National Development.

He added that 80 percent of shoebox units are located in the central region.

In addition, OCBC Research noted that the number of shoebox units in the OCR (Outside Central Region) could grow more than 450 percent by 2015.

But with the limited supply of completed units, the rental market in the OCR remains untested. One major risk is that buyers of uncompleted units in the primary market are basing their decisions on current rental levels, which could be skewed upwards by a small completed supply.

“If rental levels fall due as supply spikes dramatically after 2015, then capital values are likely to face corresponding downward pressure. This is particularly so if interest rates start to increase as well, reversing the virtuous cycle of liquidity fuelled demand,” OCBC said.

It added that the number of households in Singapore that can afford a S$1 million condo have increased by 86 percent. This is due to the fact that the income hurdle in buying such property fell by 18 percent.

“From 2008, we saw interest rates decline from ~2.5 percent to their current levels around 0.4 percent,” it noted.

Using a S$1.0 million condo as a benchmark, OCBC noted that monthly mortgage payments dropped by about 18 percent in Q1 2012 from S$3,400 to S$2,600.

“Assuming mortgage payments constitute at most 30 percent of household (HH) income, the income hurdle for a S$1.0 million property fell 18 percent from S$10,600 to S$8,700 per month.”

Source : PropertyGuru – 2012 Jun 27