The lowering of LTV limit will, therefore, encourage more prudent borrowing and dampen demand at the higher end of the market, which should, in turn, have a knock-on effect of stabilising the rest of the resale market. History tells us that the property market moves in cycles, and those who buy at higher prices with larger loans are also hardest hit when the market cools. We will monitor the market after these latest moves and will take action if necessary.
Impact of the increased EHG. EHG is means-tested, progressive and targeted. The latest round of enhancements is tiered such that lower-income first-timer households will receive more support. This reduces the risk of fueling the wider resale market. Furthermore, sellers may not be able to size up the grant amount that flat buyers receive, as HDB does not share the personal information of flat buyers with flat sellers, including the grant amounts that buyers are entitled to.
Impact on low-income families. Mr Yip Hon Weng raised concerns about the impact of the lower LTV limit on low-income households, such as those transitioning from rental housing to home ownership. Lower-income first-timer families need not be worried, as the increase in EHG will more than offset the reduction in loan quantum from the lowering of LTV limit for these families. In other words, when the two measures are stacked together, their total housing budget has actually increased, hence making home ownership more attainable than before. There may be a small number of low-income families, including second-timers, who are affected by the lower LTV limit but are not eligible for EHG. I encourage them to approach HDB proactively to discuss their housing options. HDB has dedicated support schemes for low-income second-timer families, such as the Step-Up CPF Housing Grant or Fresh Start Housing Scheme.
These latest changes reflect the Government’s commitment to provide a diverse range of affordable housing options for Singaporeans. We will continue to watch both the PRP and HDB resale markets closely and will not hesitate to act decisively to ensure prices remain in line with economic fundamentals.
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