reporter2
25-03-22, 11:40
Current income cap to own BTO flats still reasonable for now: analysts
Mar 25, 2022
THE current income ceiling that buyers need to meet to buy a build-to-order (BTO) Housing Development Board (HDB) flat still looks reasonable for now.
In fact, buyers can look to other options available in the mass market if they require a home for themselves, said analysts.
Currently, a couple comprising a Singapore citizen and another citizen or a permanent resident cannot have an average monthly household income that exceeds S$14,000 to be eligible to buy a BTO flat.
With home prices rising rapidly recently, raising the income cap may be an option to allow more families to own homes.
However, analysts noted that it is still too soon for a price revision, noting that the income cap was last raised in 2019.
The income cap had been raised 3 times every 4 years in the past decade - in 2011, 2015 and 2019. Prior to that, the ceiling was kept unchanged for over a decade.
Christine Sun, senior vice-president of research and analytics at Orange Tee and Tie, noted that it takes time to assess the price fluctuations and impact of the last policy change, and raising prices too quickly may cause many Singaporeans to be priced out of the market due to the increase in the competition.
When raising the income ceiling, it is also important to monitor how fast the median income has changed over the years.
"Although it has been observed that more couples are earning higher salaries, this may not be true for the general population," Sun said.
Sun noted that the median household income has increased by around 4 per cent from 2019 to 2021, while in the past 2 revisions, the median income has risen by 17 per cent and 24 per cent for each of the 4-year periods.
Furthermore, as BTO flats are also heavily subsidised, it is important to ensure that they are made accessible to those who need affordable housing.
Wong Siew Ying, head of research and content at PropNex Realty, noted that raising the income ceiling will enable more people to ballot for BTO flats, which may make it more challenging for families to secure a new flat in the already competitive market.
Wong added that families who have exceeded the income cap can also look at other options, such as HDB resale flats, executive condominiums or private housing sold in the mass market.
In fact, Leonard Tay, head of Singapore research at Knight Frank, noted that many HDB residential areas are now more accessible as the transport system has advanced over the years.
Thus it is not that couples who have exceeded the current income cap are not without options, and that not every new family needs to rely on BTO units for their first homes, Tay said.
As for the idea that BTO flats will help drive Singapore's birth rate, Knight Frank's Tay said the flats are likely not meant to be the key catalysts to encourage new couples to start their own families.
Instead, he cited work-life harmony as a key issue for the low birth rate here, adding that if Singaporeans are less focused on their careers before starting a family, couples may be more inclined to secure family homes within their means and not be stressed over the supply of BTO launches or waiting time.
PropNex Realty's Wong also said the decision by couples to start families often boil down to personal choices.
While owning a BTO flat could help to some degree as couples can have a home to call their own, there are also many factors that come into play such as demographic, culture and lifestyle changes, Wong said.
Apart from BTO home ownership, Wong also noted that HDB's new buyback assistance related to the Ethnic Integration Policy (EIP) will level the playing field for EIP-constrained flat owners in the property market.
Earlier in March, HDB said it will offer to buy back flats on a case-by-case basis for eligible owners who face "genuine difficulties" selling their homes due to EIP constraints.
Wong said that this "definitely makes things a lot fairer" for minority owners, as they usually take longer to sell their flats and may even sell at a lower value.
Mar 25, 2022
THE current income ceiling that buyers need to meet to buy a build-to-order (BTO) Housing Development Board (HDB) flat still looks reasonable for now.
In fact, buyers can look to other options available in the mass market if they require a home for themselves, said analysts.
Currently, a couple comprising a Singapore citizen and another citizen or a permanent resident cannot have an average monthly household income that exceeds S$14,000 to be eligible to buy a BTO flat.
With home prices rising rapidly recently, raising the income cap may be an option to allow more families to own homes.
However, analysts noted that it is still too soon for a price revision, noting that the income cap was last raised in 2019.
The income cap had been raised 3 times every 4 years in the past decade - in 2011, 2015 and 2019. Prior to that, the ceiling was kept unchanged for over a decade.
Christine Sun, senior vice-president of research and analytics at Orange Tee and Tie, noted that it takes time to assess the price fluctuations and impact of the last policy change, and raising prices too quickly may cause many Singaporeans to be priced out of the market due to the increase in the competition.
When raising the income ceiling, it is also important to monitor how fast the median income has changed over the years.
"Although it has been observed that more couples are earning higher salaries, this may not be true for the general population," Sun said.
Sun noted that the median household income has increased by around 4 per cent from 2019 to 2021, while in the past 2 revisions, the median income has risen by 17 per cent and 24 per cent for each of the 4-year periods.
Furthermore, as BTO flats are also heavily subsidised, it is important to ensure that they are made accessible to those who need affordable housing.
Wong Siew Ying, head of research and content at PropNex Realty, noted that raising the income ceiling will enable more people to ballot for BTO flats, which may make it more challenging for families to secure a new flat in the already competitive market.
Wong added that families who have exceeded the income cap can also look at other options, such as HDB resale flats, executive condominiums or private housing sold in the mass market.
In fact, Leonard Tay, head of Singapore research at Knight Frank, noted that many HDB residential areas are now more accessible as the transport system has advanced over the years.
Thus it is not that couples who have exceeded the current income cap are not without options, and that not every new family needs to rely on BTO units for their first homes, Tay said.
As for the idea that BTO flats will help drive Singapore's birth rate, Knight Frank's Tay said the flats are likely not meant to be the key catalysts to encourage new couples to start their own families.
Instead, he cited work-life harmony as a key issue for the low birth rate here, adding that if Singaporeans are less focused on their careers before starting a family, couples may be more inclined to secure family homes within their means and not be stressed over the supply of BTO launches or waiting time.
PropNex Realty's Wong also said the decision by couples to start families often boil down to personal choices.
While owning a BTO flat could help to some degree as couples can have a home to call their own, there are also many factors that come into play such as demographic, culture and lifestyle changes, Wong said.
Apart from BTO home ownership, Wong also noted that HDB's new buyback assistance related to the Ethnic Integration Policy (EIP) will level the playing field for EIP-constrained flat owners in the property market.
Earlier in March, HDB said it will offer to buy back flats on a case-by-case basis for eligible owners who face "genuine difficulties" selling their homes due to EIP constraints.
Wong said that this "definitely makes things a lot fairer" for minority owners, as they usually take longer to sell their flats and may even sell at a lower value.