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New HDB BTO Flats To Become More Affordable
Before Singapore property prices started it’s irrepressible ascent after the Lehman Brothers collapse, new HDB flat were selling at around 4 years of salary. This means that even if we take the high end of a $8,000 income household, the maximum price a buyer of HDB BTO was $384,000.
How times have changed in such a short time. New flats now can costs up to 5.5 years of annual income crashing past the $500,000 mark.
Bearing in mind that the Housing Development Board operates with the goal of providing affordable housing for the people, it is perhaps timely that Minister Khaw Boon Wan Promised to bring the cost of Build-to-order flats back to the more affordable levels of so many years ago.
New flats in non-mature estates like Punggol is expected to see a sharp decline in prices which will make the financial commitment of owning a home less of a burden especially for young first time home buyers.
Since new flats are no longer linked to prices of resale properties, the 2 should now be viewed as 2 completely different categories of housing for home buyers. As resale property prices continue to rise, there will be no upward pressure to price new flats higher.
How exactly Mr Khaw plans to achieve this is anyone’s guess. But a huge goal like this must likely be supported by big fundamental changes to housing options and policy redesign. Possible policy changes that may be look at can include more grants, shorter leases, making it difficult to treat HDB flats as investments, etc.
A highly anticipated announcement that was finally made was those on singles and divorcees. Singles can now purchase flat direct from HDB. They will have to be at least the age of 35 and generate a monthly income of only up to $5,000. Singles will however, have restrictions on the size of apartments they are eligible to purchase. Divorcees or the widowed with young children will also have a chance to purchase new flats from HDB.
These changes from HDB is expected to send ripples throughout the property environment in Singapore. The impact will be highly influenced by how fast these changes are enforced and executed. The first direct hit that comes to mind are private shoebox apartments. These are apartments less than 500 square feet. As singles can now get a much cheaper flat from HDB at about the same size compare to private developers, it remains to be seen if shoebox apartments are shunned by this market segment.