New property cooling measures has been introduced on the final day of September 2022 to suppress the rising HDB resale flats prices.

15-month wait-out period

To keep resale HDB flats affordable, the Singapore Government will impose a 15-month wait-out period for private residential home owners before they can purchase a non-subsidised HDB resale flat. This will kick in after they have sold their private property such as condominium or landed house.

However, the wait-out period will not apply to elderly folks aged 55 and above who are downsizing from their private residential property to a four-room or smaller resale flat.

The 30 months wait-out period for private home owners who are first-timers and wish to apply for the Central Provident Fund (CPF) Housing Grant and Enhanced CPF Housing Grant for their resale flat remains unchanged.

Previously, these property owners were allowed to buy a HDB resale flat on the open market, as long as they sell their private properties within six months of the purchase.

Loan to value (LTV) limit reduced to 80%

The second cooling measure is to lower the loan-to-value limit for HDB loans from 85 per cent to 80 per cent.

The lower LTV limit will apply to new flat applications for sales exercises launched and complete resale applications which are received by HDB on or after 30 September 2022.

This reduces the maximum amount potential home owners can borrow from HDB.

For HDB buyers who are taking bank loans, the LTV limit remain at 75 per cent.

Considering that the housing loan interest rates have risen significantly and they are poised to rise further next year, the Government's intention is to encourage Singaporeans to be prudent in buying a home and avoid future difficulties in servicing home loans.

Assume higher interest rates when assessing borrowers' repayment ability

For home loans granted by banks and financial institutions, MAS will raise by 0.5%-point the medium-term interest rate floor used to compute the Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR).

For HDB housing loans, HDB will introduce an interest rate floor of 3% for computing the eligible loan amount. There will be no impact to existing HLE applications received by HDB before 30 September 2022.

Key takeaways from the latest cooling measures in 2022

“The pool of HDB buyers for EM, EA and 5-room flats will be greatly reduced. Ultimately, our Government want to see lesser million dollar flats.”, said Mr Chia, Managing Director, Propertyforsale Private Limited.

“Private sellers whom want to sell and downsize to affected HDB flats may postpone their plans to sell their private property.”, said Mr Chia.

Last but not least, our Government want to redirect en-bloc owners to buy private properties and not to disrupt the public housing pricing index.