HDB Cooling Measures August 2024

HDB Cooling Measures in August 2024

In August 2024, the Singapore government introduced new HDB cooling measures. These measures aim to stabilize the housing market. They also seek to ensure affordability and more help for first time buyers, especially those lower to middle income

Key Changes Starting from August 20, 2024:

1. Lower Loan-to-Value (LTV) Limit for HDB Loans:

Previously, you could borrow up to 80% of your flat’s value with an HDB loan. Now, that’s reduced to 75%.
Example: If you’re buying a flat worth $500,000, instead of borrowing $400,000 (80%), you can now only borrow $375,000 (75%). This means you’ll need $25,000 more savings upfront.

2. Bigger Grants for First-Time Buyers:

The Enhanced CPF Housing Grant (EHG) is getting a boost to help lower-income families and singles.
Example:For families, the maximum grant increases from $80,000 to $120,000.
For singles, it goes up from $40,000 to $60,000.
This extra money can make a huge difference when buying your first home.

First Timers Families Grant

Singles or Couples comprising of First Timers and Second Timers Grant

Impact on HDB Sellers

Base on hisotrical trend, the last 2 rounds of lowering the loan to value ratio from 90% to 85% in December 2021 and further cut to 80% in September 2022 did not have much impact on the overrall price movement. Resale price index remained stagnant for about 3 quarters after the first adjustment and on the 2nd adjustment, prices went up North and never looked back ever since. So we do not expect this round of lowering have any much impact on the resale prices.

Advice for Potential First time or young HDB Buyers

If you are planning to buy an HDB flat, consider these tips:

1. Assess your financial situation carefully. Ensure you have enough for the down payment.
2. Plan early and start saving more since the LTV has been lowered and the grant amount given if you happen to be in the single or family household group of buyers, earning from $2,500 and $4,000 per month and above respectively, the increase in grant amount is unlikely sufficient enough to cushion off the rise in HDB resale property prices. 
3. Look for HDB flat that offer long-term value and fits in your long term plan. Be it resale, Built to Order (BTO) or Sale of Balance flat (SBF).

Advice for Potential HDB Sellers

Sellers should also take note of the new measures:

1. As prices are unlikely to come down, that would also mean that your plans to buy your next property will be high as well do factor in the cost of buying.  
2. Stay informed about market trends. This will help you make better selling decisions.
3. Consider the timing of your sale. Wait for the market to stabilize if possible.

Conclusion

The HDB cooling measures of August 2024 though aims to create a balanced housing market. It is unlikely that it will have much negative impact on the prices of resale flat. For singles who are earning more than $2,500 per month and families earning more than $4,000. The increase in grant amount is unlikely to be enough to help cushion off the impact for lowered LTV and increase in housing prices especially when these 2 instruments are unable to help cover the Cash Over Valuation ( COV) in the purchase price.

Stay updated on the latest developments. This will help you navigate the market

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