Late on August 19, The Ministry of National Development (MND) and Housing Development Board (HDB) jointly announced measures to cool the HDB resale market while providing more support for lower-to-middle-income first-time homebuyers.

With effect from midnight of August 20, the loan-to-value (LTV) limit for HDB housing loans will be lowered by 5% from 80% to 75%. It brings the LTV limit for HDB loans in line with loans granted by financial institutions, which remain at 75%.

The revised HDB LTV limit will apply to complete resale applications received by HDB on or after August 20 and Build-to-Order (BTO) applications for the October 2024 BTO exercise onwards.

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According to the release, first-time home buyers, especially lower-income households, will be less affected by the lower LTV limit as they receive significant housing grants.

Prime Minister Lawrence Wong announced in the National Day Rally 2024 that the government will increase the Enhanced CPF Housing Grant (EHG) quantum for new and resale flats to support first-time home buyers. The EHG will be increased by:

• Up to $40,000 for eligible first-timer families, from the current maximum grant amount of $80,000 to $120,000; and
• Up to $20,000 for eligible first-timer singles, from the current maximum grant amount of $40,000 to $60,000.

The EHG was introduced in September 2019 as a means-tested grant that provides additional support for lower-to-middle-income households buying new or resale flats as their first home.

Earlier rounds of cooling measures and the ramped-up BTO flat supply have helped to moderate the escalation in HDB resale prices to 4.9% growth in 2023, down significantly from 10.4% in 2022. However, resale prices stil rose by over 4% in the first half of 2024, driven by strong, broad-based demand and some supply tightness, as fewer flats reached their Minimum Occupation Period this year.

"The government closely monitors the HDB resale market," says the announcement. "Given the sustained, strong, broad-based demand for HDB resale flats, these measures will help cool the market and encourage prudent borrowing, thus making housing more affordable for lower-to-middle income first-time home buyers.”

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