With roughly 75% of Singapore families expected to qualify for the improved housing licenses, analysts consider the new steps not just fulfilled the Ministry of National Development’s (MND) aim of increasing affordability for new families to purchase HDB flats, it might also cause greater stability for the housing industry.
DBS analyst’s Derek and Rachel Tan said the changes can result to some slow bottoming and improved stability inside the HDB resale market.
In Q2 2019, the land cost index for the HDB resale market dropped 0.2 percentage quarter-on-quarter versus the 0.4 percent growth registered for properties out the central area (OCR).
“Through the years, these new modifications must arrest the decline in HDB resale costs as trades pick up as time passes,” they stated.
“We consider the steps are more geared towards encouraging the HDB resale market, which has witnessed some pressure recently. This is because of greater distribution and also the government’s caution that only a tiny percentage of apartments are acceptable for redevelopment, and the rest should be surrendered upon lease expiry”
But while it could help stabilise resale costs, the new steps may pull down action within the private real estate industry.
“The steps are somewhat negative for the personal property market, as a few first-time buyers can change their focus to public housing place fluctuations,” explained Vitay Natarajan of their RHB bank.
But, Natarajan doesn’t anticipate the change in demand to become substantial — in less than 5 per cent.
But while it could change volumes from the personal property market, Guha expects private developers to gain from the higher income limit for ECs.
Whilst 50 percent has been marketed, we anticipate a boost in the new steps,” said Guha.