More government measures for the Singapore residential market
August 21, 2011 / By Claire Gent
In his National Day Rally Speech on 14th August, Singapore’s Prime Minister Lee Hsien Loong announced the latest in a series of measures aimed at cooling the residential market in Singapore. While previous measures have focused on the private market, this time it is the public housing sector where the policy changes are to be introduced. But what are the measures, and what impact will they have on the buoyant residential market in Singapore, where previous measures have tried and often failed to stem the rapidly increasing rentals and prices for units.
Firstly, the amount of Built to Order units has been boosted for 2011 and 2012 to 25,000 units each year, up from an initial offering of 22,000 for 2011. With annual demand estimated at some 18,000 units, the excess supply should go some way to easing the backlog in demand for HDB properties given the shortage of supply over the past five years. Should demand continue to be strong we may see further increases in new supply to ensure there is no repeat of the previous under supply situation.
Secondly, the income ceiling has been raised by SGD 2,000 to SGD 10,000 for HDB properties and to SGD 12,000 for executive condominiums (ECs). While the Government has been hinting at such a policy change for several months now, it is the first time in nearly 20 years that the income ceiling has been raised and opens up the HDB and EC market to a much larger pool of buyers. Prior to the new measures being introduced, 70% of resident households were eligible to purchase an HDB flat with 78% of households eligible to buy an EC property. The measures have increased the buying pool to 78% and 84% for HDB and EC properties, respectively. Such an increase is likely to have a knock on effect in the private sector, and the mass market in particular, as more people currently earning just above the previous income ceiling will have a greater choice of properties when looking to purchase a home, easing demand for private properties in this sector.
Only time will tell what the true impact of the measures will be but, with immigration set to continue despite the tightening of criteria to qualify for a work pass, demand is unlikely to abate and the pressure to meet this with new residential supply will remain.
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