Latest Property Cooling Measures in Singapore from August 2024: What You Need to Know

The Singapore government has implemented new property cooling measures as of August 2024, aimed at maintaining stability in the property market.

These changes are significant, particularly for HDB homebuyers, as they impact affordability and financing. In this article, we’ll take a closer look at the two key updates: the reduction in the Loan-To-Value (LTV) limit for HDB loans and the increase in the Enhanced CPF Housing Grant for first-time buyers.

1. Loan-To-Value (LTV) Limit for HDB Loans Reduced from 80% to 75%

One of the latest updates from the government is the reduction of the Loan-To-Value (LTV) limit for HDB loans. As of August 2024, the maximum LTV for HDB loans has been reduced from 80% to 75%. This means that buyers can now only borrow up to 75% of the purchase price or valuation of the flat, whichever is lower, through an HDB loan.

While this may appear as a modest reduction, it has a direct impact on the upfront costs for HDB buyers. For example, if a buyer is purchasing a flat valued at $500,000, under the previous LTV limit, they could borrow up to $400,000 (80%). With the new LTV limit of 75%, they can now only borrow up to $375,000. This means buyers will need to fork out more cash or CPF savings upfront, as the minimum down payment requirement increases from 20% to 25%.

The government has introduced this measure to ensure financial prudence and to prevent households from taking on excessive debt. While it may make homeownership slightly more challenging for some, it also encourages buyers to be more financially prepared before making the commitment to purchase a home.

2. Increased Enhanced CPF Housing Grant by $40,000 for First-Time HDB Homebuyers

In contrast to the tightening of the LTV limit, the government has provided some relief for first-time homebuyers by increasing the Enhanced CPF Housing Grant (EHG). First-time HDB buyers will now receive an additional $40,000 in grants, further helping them afford their first flat.

Previously, the maximum EHG amount was capped at $80,000, but as of August 2024, it has been increased to $120,000. This enhancement aims to assist young couples and families in securing their first home, making housing more accessible for those starting their homeownership journey.

For example, a couple with a combined monthly household income of $4,000 could now qualify for a higher grant, which can be used to offset the cost of their flat, thus reducing the amount they need to borrow or pay upfront. This is a significant improvement that many first-time buyers will benefit from, especially in light of rising property prices.

Conclusion

The property cooling measures introduced in August 2024 reflect the government’s continued efforts to ensure a sustainable and affordable housing market for Singaporeans. While the reduced LTV limit for HDB loans may require buyers to make larger down payments, the increased Enhanced CPF Housing Grant provides a welcome boost for first-time buyers. Together, these changes aim to balance financial responsibility with housing affordability.

If you’re a first-time HDB homebuyer and would like to know how these measures affect you, contact our property agents today. We can provide expert guidance on navigating these changes and help you secure the best deal for your future home.