In a recent announcement, National Development Minister Desmond Lee reassured Singaporeans that the majority of resale flats remain affordable for first-time buyers. This statement comes amid concerns about rising housing prices and their impact on affordability.
Desmond Lee emphasized that the government has implemented various measures to ensure that public housing remains within reach for many Singaporeans. "Despite the strong, broad-based demand for housing and the rising prices of Housing and Development Board (HDB) resale units, Build-To-Order (BTO) flats remain affordable," Lee said. The government has kept BTO flat prices relatively stable through significant subsidies, even as market conditions fluctuate.
Government Grants and Subsidies
One of the key factors contributing to the affordability of resale flats is the range of government grants available to first-time homebuyers. Eligible buyers can receive up to $190,000 in grants, including the CPF Housing Grant, Enhanced CPF Housing Grant, and Proximity Housing Grant. These grants are designed to reduce the financial burden on buyers and make homeownership more accessible.
For instance, the CPF Housing Grant for Resale Flats offers up to $80,000 for families purchasing four-room or smaller flats, and $50,000 for those buying five-room or larger flats. The Enhanced CPF Housing Grant provides up to $80,000, with the amount tiered based on household income. Additionally, the Proximity Housing Grant offers up to $30,000 for families buying a resale flat to live with or near their parents or children.
Income Ceiling and Eligibility
To ensure that housing remains affordable for a broad segment of the population, the government has set income ceilings for various housing schemes. For example, families with a combined monthly income of $14,000 or less are eligible to purchase Plus flats on the resale market. These income ceilings help moderate demand and keep homes affordable and inclusive.
Desmond Lee highlighted that the changes will not affect the existing 1.1 million HDB flats, which will continue to be available under the current rules. "This means that Singaporeans who fall outside the $14,000 income ceiling will still have access to the existing flats, as well as Standard flats, when they enter the resale market," he noted.
The Plus Model
The introduction of the Plus model aims to further enhance affordability for first-time buyers. Plus flats are offered at choice locations within each region or near the core central region, particularly in attractive locations near transport nodes and amenities. These flats come with additional subsidies and tighter resale restrictions to keep prices lower.
To illustrate the impact of the Plus model, Desmond Lee provided an example of two couples looking for a four-room flat in the central region. In today's market, such flats are priced around $650,000 before grants. Couple A, with a combined income of $9,000, would need to use about a quarter of their monthly income for the mortgage and pay around $250 in cash. Couple B, earning $7,000, would need to use almost one-third of their income and top up $52,000 in cash or CPF.
Under the Plus model, the price of the same flat would be reduced to around $550,000 before grants. This would make the flat more affordable for both couples, with Couple A paying less than a quarter of their income and zero cash, and Couple B paying slightly more than a quarter of their income and $250 in cash.
Ensuring Social Inclusivity
Desmond Lee also emphasized the importance of social inclusivity in public housing. By keeping resale prices within reach for more Singaporeans, the government aims to ensure more social mixing and reduce the risk of social stratification based on where people live. "This is a fairer system," Lee stated.
The majority of resale flats in Singapore remain affordable for first-time buyers, thanks to a combination of government grants, subsidies, and income ceilings. The introduction of the Plus model further enhances affordability, making it possible for more Singaporeans to own homes in desirable locations. As Desmond Lee assured, the government is committed to keeping public housing affordable and accessible, ensuring that homeownership remains a viable option for many.
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