THREE - YEAR WAITING PERIOD FOR PRs TO BUY RESALE FLATS
August 28, 2013
Rules on HDB loans also tightened to stabilise market.
Three-year waiting period for PRs to buy resale flatsBedok South HDB estate at dusk on June 2, 2013. Newly minted permanent residents will no longer be able to buy a resale public flat immediately. -- ST FILE PHOTO: JAMIE KOH
NEWLY MINTED permanent residents will no longer be able to buy a resale public flat immediately.
Instead, they will now have to wait three years, as part of the Housing Board's new swathe of policy measures which was announced yesterday by National Development Minister Khaw Boon Wan.
Describing the waiting period as "fair", he said it would further distinguish between citizens and non-citizens.
Another big change: tighter rules on HDB loans, aimed at promoting financial prudence among buyers and to further stabilise the resale market.
From today, resale flat buyers who take HDB loans can use only up to 30 per cent of their gross monthly pay to repay their loans, down from 35 per cent. This brings it in line with the current mortgage servicing ratio limit for private loans, which was similarly adjusted by the Monetary Authority of Singapore in January.
The maximum repayment period for HDB housing loans will also be lowered from 30 to 25 years, and from 35 to 30 years for bank loans taken to buy HDB flats.
This is to protect buyers who want to stretch their finances and opt for bigger flats.
"If you make flats cheaper, people buy bigger flats. Then we are always chasing the tail, and flats will always be unaffordable," said Mr Khaw.
Property analysts said the resale market - already at its lowest transaction volume since 1997 - will take the biggest hit. Cash premiums paid above a flat's valuation could also be lowered.
"Demand will be drawn away by buyers who can't secure a larger loan for their ideal resale flat, and PRs who account for a fifth of the resale market," said ERA Realty key executive officer Eugene Lim.
On the new PR rule, Mr Khaw said: "There will be some impact on the market, but eventually things will catch up again in about three years' time."
R'ST research director Ong Kah Seng noted many PRs go for resale flats instead of pricier condominium units, as they needed to pay a 5 per cent additional buyer's stamp duty on their first purchase starting January this year.
"This will help to ensure that PRs are not crowding the HDB resale market, and that enhanced affordability is indeed targeted at Singaporeans," he said.
PRs fully owned 51,000 HDB flats - 6 per cent of all HDB flats - as of end June. Permanent residency was given to about 60,000 people in the past two years.
Permanent resident Xi Zhuang, 35, said the new rule was harsh, but understandable. "Many locals believe that PRs are the ones who drive up resale prices (by paying high cash premiums for flats). That is not true for all of us," said the graphic designer.
Besides stabilising the market, HDB also unveiled more details on the schemes targeted at different buyer groups that Prime Minister Lee Hsien Loong touched on recently.
For instance, more buyers - with household income not more than $6,500 - will be eligible for the Special Housing Grant.
A new type of flat will also be launched to encourage multiple generations to live under one roof.
Info courtesy - The Straits Times
