I’m sure you’ve been bombarded by plenty of news, updates, thoughts, and opinions from the most recent cooling measures. However, since we’re also a property blog, here’s our take on the potential winners and losers from these implemented changes.
Winner #1 – First-time HDB buyers
Talk on the street has been that recent HDB prices have been a cause for concern for new homeowners. With umpteen million-dollar houses and even a recent BTO exercise pricing a 5-room Ang Mo Kio flat at $877,000, the future does seem bleak. Especially for newly married couples looking to buy a bigger house to accommodate future additions to the family.
As a result, these measures may affect them quite positively. And we’re crowning this group as the first winners.
While the reduction in HDB Loan’s Loan-To-Value (LTV) ratio and computational interest rates increasing means they’ll be forced to borrow less, first-time HDB buyers will still be tapping on the many grants provided to help them in their purchase. Coupled with the chance of HDB prices decreasing, this is a big win for this pool of new buyers.
Loser #1 – Private Property Owners (under the age of 55)
For private property owners (PPOs), a 15-month waiting period will be imposed for those looking to buy a HDB flat. Before the change, PPOs had to dispose of their private property within 6 months of their purchase. We covered this here.
But now, they’ll have to sell first, wait for 15 months, and then make the purchase of a HDB flat. It does seem quite long and also, a very odd number of months.
The idea here is that if you’re selling off a private property, you’ll realize a much bigger cash windfall, and would likely be more than willing to pay for higher Cash Over Valuations for your new HDB home. The government bodies believe this to be a big driver in the rise in HDB resale prices.
But the question is, what are they expected to do during these 15 months? Well… rent.
What happens here is that a bulk of their cash proceeds will be used to pay for rent, reducing the likelihood of them paying a huge COV for their next HDB purchase.
To point out, I also mentioned odd because no one rents for 15 months. You usually sign a 1 or 2-year lease. So, I’m personally not sure why the odd number, but it is what it is.
Winner #2 – Landlords
And on that note, our next winner is the landlord.
Those who can’t buy will rent.
But with the 15-month waiting period, a new group of people will be added to the rental pool that wouldn’t typically be looking for long-term rentals. Even higher demand will continue to drive the red-hot rental market, and this does seem like it’s on an exponential rise.
While supply may increase as the same private property owners may decide to rent out their place instead of sell, demand is bound to increase at a higher rate.
Could we see a separate batch to cool the rental market in the future? Tenants can only hope.
Loser #2 – HDB Homeowners
Finally, we come to the last group, our HDB sellers.
For those who already cashed out and sold the property in the last few months, congratulations!
But for those waiting for a higher price, we may have hit a brick wall.
These measures are meant to combat 2 very specific issues.
- The rise in HDB prices
- The affordability of lenders in the wake of rising interest rates
So immediately, we do expect at least a pause in the 26-month rise in prices, but I myself do not think prices will plummet. Instead, we can predict a plateau in prices.
Rather, the issue here comes in the second targeted action and that directly affects the amount they will be allowed to borrow for their next home. Only this time, second-time buyers have fewer grants available to tap on, which would result in forking out more CPF or cash for your next purchase.
Don’t fret however because it is still early days and your home values may not see a sharp decrease overnight, so you may still be incentivized to sell at current prices until we see movements in the market because we may be at the peak right now.
In essence, if you’re looking to sell your home and want further insights on how these measures will affect you directly, contact us via our Live Chat, Whatsapp, or fill up this form, and book a free consultation with our knowledgeable and experienced in-house agents who have a track record of transacting more than 70 homes every year.