New Measures Cool Public Housing Resale Market Ltv Limit Cut Hdb Loans

The Ministry of National Development (MND) and Housing Development Board (HDB) have announced new measures to manage the HDB resale market and provide greater assistance to lower-to-middle-income first-time homebuyers. Effective from midnight of August 20, the loan-to-value (LTV) limit for HDB housing loans will be reduced by 5% from 80% to 75%. This brings it in line with loans offered by financial institutions, which also have an LTV limit of 75%. The new LTV limit will apply to complete resale applications received by HDB on or after August 20, as well as for Build-to-Order (BTO) applications for the October 2024 exercise onwards.

According to the joint announcement, first-time home buyers, particularly those from lower-income households, will be less affected by the lower LTV limit as they are eligible for significant housing grants. During the National Day Rally in 2024, Prime Minister Lawrence Wong had revealed that the government would increase the Enhanced CPF Housing Grant (EHG) quantum for new and resale flats to support first-time homebuyers. The EHG will be raised by up to $40,000 for eligible first-timer families, from the current maximum grant amount of $80,000 to $120,000, and by up to $20,000 for eligible first-timer singles, from the current maximum grant amount of $40,000 to $60,000. Introduced in September 2019, the EHG is a means-tested grant that provides additional support for lower-to-middle-income households purchasing new or resale flats as their first home.

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Earlier rounds of cooling measures and the increased supply of BTO flats have helped to moderate the rise in HDB resale prices to 4.9% growth in 2023, a significant drop from 10.4% in 2022. However, in the first half of 2024, resale prices still increased by over 4%, driven by strong and widespread demand, as well as some supply tightness due to fewer flats reaching their Minimum Occupation Period this year.

“The government closely monitors the HDB resale market,” states the announcement. “Given the sustained, strong, broad-based demand for HDB resale flats, these measures will help to cool the market and encourage responsible borrowing, making housing more affordable for lower-to-middle-income first-time home buyers.”