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About September 2022 – New Cooling Measures | The government announced another round of property cooling measures on 29 September 2022, close to midnight. This happens to be the first time several rounds of property curbs have been executed in such a short time. The declaration comes less than a year after the last round in Dec 2021. Property prices and transaction volumes have been soaring, so the announcement was expected.

In response to the growing problem of housing affordability, the government made several changes to housing policy last year. Most notably, they instituted a new 55% Total Debt Servicing Ratio, lowered the Loan-to-Value limit on HDB loans to 85%, and increased the Additional Buyer’s Stamp Duty for Singaporeans and Singapore Permanent Residents purchasing their second and subsequent properties.

Picture from Today Online

Now, let’s take a closer look at the specific details of each new measure and how they could affect home buyers and owners.

First, the loan quantum threshold will be tightened through the implementation of interest rate floors. The government has increased the maximum loan quantum, especially for mortgages in response to the rise in market interest rates and expectations of further increases. According to an official statement from the Ministry of National Development and the Housing and Development Board, this is “to see to it there’s sensible borrowing and prevent upcoming difficulties in servicing home loans”.

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Additionally, the minimum down payment required for an HDB loan is lower than that of a bank loan. However, this difference is narrowing. In the last month of 2021, the government decreased the HDB LTV limit from ninety percent to 85%. 

After a long wait, the government has finally introduced a 15-month period during which private property owners and ex-private property owners are not allowed to buy non-subsidized HDB resale flats. However, seniors aged 55 and above who are moving to a 4-room or smaller resale flat will be exempted from this rule.

“Unfortunately, the new measures are going to have an effect on buyers in the luxury and high-end market who have enough cash and/or capital,” said Dr. Lee. “The impact on the high-end market will be limited. The slowdown in sales is probably going to be felt in the massive market of development projects that depend on the increased demand from HDB upgraders.”