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Enhanced grants expected to lift resale HDB market
The move to enhance the CPF Housing Grant for first-time buyers of resale HDB flats is expected to help sustain the recovery in resale transactions and stabilise resale prices.
While most market watchers were not surprised that the government chose against tweaking any property cooling measure, such a boost in housing subsidy for resale flats did catch many off guard.
Some consultants posit that this is to help soak up additional HDB resale supply as more people are taking possession of newly completed Build-To-Order (BTO) flats, executive condominiums (ECs) and private homes.
The grant, targeted at the resale market, is timely as a large volume of BTO HDB units, totalling about 18,000, reached the end of their minimum occupation period (MOP) as at end-2016. This is 80 per cent higher than the number of units that reached MOP in 2015.
As part of the Budget 2017 measures announced on Monday, the government will increase the CPF Housing Grant for first-timer families and first-timer singles buying resale HDB flats.
With the enhancements, first-timer families can now receive up to S$110,000 in grants, including the Additional CPF Housing Grant (up to S$40,000) and Proximity Housing Grant (S$20,000).
Similarly, eligible first-timer singles buying resale flats can enjoy up to S$55,000 in housing grants, including the existing Additional CPF Housing Grant (up to S$20,000) and Proximity Housing Grant (S$10,000).
Minister for National Development Lawrence Wong said in his Facebook post on Monday that this would help those who wish to live near their parents in mature estates where there are fewer BTO projects, or those who wish to move into their own home quickly to start a family.
The latest BTO exercise, which closed on Monday, saw overwhelming applications for flats in mature estates Clementi and Tampines, which were over three times subscribed. Flats in Punggol were about 2.7 times subscribed; 5-room flats in Punggol saw the highest subscription by flat-type at 5.2 times.
Last year, resale HDB transactions rose for the second year in a row - by 7.8 per cent from a year ago to 20,813 even as resale prices dipped 0.1 per cent over the same period.
This latest measure is not seen as an intention to move the residential market, though a healthy HDB resale market with stable prices may lift the sentiment for upgrading, hence resulting in a positive spillover effect for private housing.
With the expected boost in demand arising from the increased housing subsidy, resale prices should either stabilise or rise slightly.
However, some market watchers were disappointed with the lack of relief on taxes on vacant land and properties or land slated for development.
"Any reduction in property tax would certainly help developers and owners of vacant properties cope with the slowdown in the property market," said KPMG head of real estate Tay Hong Beng.
On property cooling measures, he felt that there was nothing to stop the government from reviewing the situation at a later stage. "Changes to the rules could probably be brought about in a gradual manner in order not to unintentionally create an immediate spike in demand in the property market."
Adapted from: The Business Times, 21 February 2017
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