New Reporter
15-02-23, 08:10
Budget 2023: Higher housing grants may shunt demand to HDB resale market: analysts
Feb 14, 2023
Increase in Central Provident Fund Housing Grant could lead to rise in housing budgets
Increased ballot chances may lead to more eligible buyers applying for Build-To-Order flats
FIRST-TIME homebuyers eyeing the HDB resale market will get up to S$30,000 more in housing grants to help them buy the pricier flats, but the support may prop up demand and prices for resale flats, analysts said.
While the increase in housing grants will alleviate concerns of young families in securing their first homes amid the supply crunch in Build-To-Order flats, some analysts noted that it may also lead to rising resale flat prices.
The government on Tuesday (Feb 14) announced that the Central Provident Fund Housing Grant for eligible first-timer families buying four-room or smaller resale flats will go up from S$50,000 to S$80,000. The grant for those buying five-room or larger flats will go up from S$40,000 to S$50,000.
https://i.imgur.com/ly3mMs1.png
First-timer singles buying resale flats will get more grants too, from S$25,000 to S$40,000 for singles buying a two to four-room resale flat, and from S$20,000 to S$25,000 for those buying a five-room resale flat.
The increased grant will come into effect immediately, and qualifying families will receive the additional grant amount in their CPF account from April 2023.
Together with the Enhanced CPF Housing Grant and the Proximity Housing Grant, first-timer families will be entitled to up to S$190,000 in housing grants when buying a resale flat. Singles will get up to S$95,000 in housing grants.
The assistance would give first-time buyers of resale flats “greater financial muscle”, said Lee Nai Jia, head of real estate intelligence, data and software solutions in the PropertyGuru Group.
“Demand is expected to be bolstered in the HDB resale market, especially for smaller unit types (four-room and smaller), and likely propped up by first-time buyers,” he said. “As a result, the HDB resale flat prices are likely to be supported in the immediate term.”
Lee Sze Teck, senior director of research at Huttons, noted that the move may shift some demand from the BTO market to the resale market.
“Transaction volume in the HDB resale market may increase to between 26,000 and 28,000, up from an earlier projection of 24,000 to 26,000,” he said. “Growth in resale prices may increase to between 8 per cent and 10 per cent.”
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: “Since more subsidies are given, we may expect more eligible buyers to buy at popular locations, such as mature estates. Others may buy slightly bigger flats with the additional grants.”
Wong Xian Yang, head of research at Cushman & Wakefield, noted that while the increase in grants could spur some buyers to consider more expensive flats in mature estates – though this is expected to be minimal – a larger impact may be seen for the non-mature estates, where the price base is lower.
Nicholas Mak, head of research and consultancy at ERA, also noted that the increase in housing grants could lead to a rise in the housing budgets of certain buyers, making them “willing to pay more” for the resale flats.
This could also lead to some sellers raising their asking prices, and “would result in upward pressure on HDB resale prices”, he said.
“Throwing more money at the HDB resale market may be welcomed by the eligible homebuyers. But the beneficial effects could be short-lived as it could result in further property price inflation. The rise in HDB resale flat prices could spill over to the private housing market,” said Mak.
PropNex chief executive officer Ismail Gafoor noted that “a small handful of flat owners of highly attractive units” may raise their asking prices, but such sellers risk pricing themselves out of the market as most buyers remain price-conscious.
Still, analysts agree that the increased grants will make housing more affordable and ease the anxieties of young couples who need urgent housing.
“The HDB resale price index rose by nearly 31 per cent between Q1 2020 and Q4 2022. We think this is a timely move and the substantial increase in the CPF Housing Grant will help flat buyers manage the cost of resale flats by lowering their down payment or lowering the loan amount needed,” said PropNex’s Gafoor.
In the BTO market, the government will give first-timer families with children and young married couples aged 40 years and below an additional ballot for their BTO flat applications, starting later this year.
The Housing and Development Board already sets aside the bulk of its BTO supply for first-timer families, but the first-timer category covers a “wide range of applicants”, including those who already have their own homes but have not received housing subsidies before, said Wong.
This is why the government will focus the BTO support on first-timer families with children and young married couples aged 40 and below, who are buying their first home.
Sun from OrangeTee said that the increased ballot chances may lead to more eligible buyers applying for BTO flats, and can also help lower to middle-income earners own a home faster, especially if they are “cash-strapped and cannot afford a resale flat”.
https://www.businesstimes.com.sg/property/budget-2023-higher-housing-grants-may-shunt-demand-hdb-resale-market-analysts
Feb 14, 2023
Increase in Central Provident Fund Housing Grant could lead to rise in housing budgets
Increased ballot chances may lead to more eligible buyers applying for Build-To-Order flats
FIRST-TIME homebuyers eyeing the HDB resale market will get up to S$30,000 more in housing grants to help them buy the pricier flats, but the support may prop up demand and prices for resale flats, analysts said.
While the increase in housing grants will alleviate concerns of young families in securing their first homes amid the supply crunch in Build-To-Order flats, some analysts noted that it may also lead to rising resale flat prices.
The government on Tuesday (Feb 14) announced that the Central Provident Fund Housing Grant for eligible first-timer families buying four-room or smaller resale flats will go up from S$50,000 to S$80,000. The grant for those buying five-room or larger flats will go up from S$40,000 to S$50,000.
https://i.imgur.com/ly3mMs1.png
First-timer singles buying resale flats will get more grants too, from S$25,000 to S$40,000 for singles buying a two to four-room resale flat, and from S$20,000 to S$25,000 for those buying a five-room resale flat.
The increased grant will come into effect immediately, and qualifying families will receive the additional grant amount in their CPF account from April 2023.
Together with the Enhanced CPF Housing Grant and the Proximity Housing Grant, first-timer families will be entitled to up to S$190,000 in housing grants when buying a resale flat. Singles will get up to S$95,000 in housing grants.
The assistance would give first-time buyers of resale flats “greater financial muscle”, said Lee Nai Jia, head of real estate intelligence, data and software solutions in the PropertyGuru Group.
“Demand is expected to be bolstered in the HDB resale market, especially for smaller unit types (four-room and smaller), and likely propped up by first-time buyers,” he said. “As a result, the HDB resale flat prices are likely to be supported in the immediate term.”
Lee Sze Teck, senior director of research at Huttons, noted that the move may shift some demand from the BTO market to the resale market.
“Transaction volume in the HDB resale market may increase to between 26,000 and 28,000, up from an earlier projection of 24,000 to 26,000,” he said. “Growth in resale prices may increase to between 8 per cent and 10 per cent.”
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: “Since more subsidies are given, we may expect more eligible buyers to buy at popular locations, such as mature estates. Others may buy slightly bigger flats with the additional grants.”
Wong Xian Yang, head of research at Cushman & Wakefield, noted that while the increase in grants could spur some buyers to consider more expensive flats in mature estates – though this is expected to be minimal – a larger impact may be seen for the non-mature estates, where the price base is lower.
Nicholas Mak, head of research and consultancy at ERA, also noted that the increase in housing grants could lead to a rise in the housing budgets of certain buyers, making them “willing to pay more” for the resale flats.
This could also lead to some sellers raising their asking prices, and “would result in upward pressure on HDB resale prices”, he said.
“Throwing more money at the HDB resale market may be welcomed by the eligible homebuyers. But the beneficial effects could be short-lived as it could result in further property price inflation. The rise in HDB resale flat prices could spill over to the private housing market,” said Mak.
PropNex chief executive officer Ismail Gafoor noted that “a small handful of flat owners of highly attractive units” may raise their asking prices, but such sellers risk pricing themselves out of the market as most buyers remain price-conscious.
Still, analysts agree that the increased grants will make housing more affordable and ease the anxieties of young couples who need urgent housing.
“The HDB resale price index rose by nearly 31 per cent between Q1 2020 and Q4 2022. We think this is a timely move and the substantial increase in the CPF Housing Grant will help flat buyers manage the cost of resale flats by lowering their down payment or lowering the loan amount needed,” said PropNex’s Gafoor.
In the BTO market, the government will give first-timer families with children and young married couples aged 40 years and below an additional ballot for their BTO flat applications, starting later this year.
The Housing and Development Board already sets aside the bulk of its BTO supply for first-timer families, but the first-timer category covers a “wide range of applicants”, including those who already have their own homes but have not received housing subsidies before, said Wong.
This is why the government will focus the BTO support on first-timer families with children and young married couples aged 40 and below, who are buying their first home.
Sun from OrangeTee said that the increased ballot chances may lead to more eligible buyers applying for BTO flats, and can also help lower to middle-income earners own a home faster, especially if they are “cash-strapped and cannot afford a resale flat”.
https://www.businesstimes.com.sg/property/budget-2023-higher-housing-grants-may-shunt-demand-hdb-resale-market-analysts