SINGAPORE – Account manager Charlene Teo, 25, and her fiance have been looking for a four-room resale flat in the mature estate of Queenstown for four months.
But new property cooling measures that kicked in on Sept 30 meant a change of plans for the couple, who plan to marry in 2023.
The tightened loan-to-value (LTV) limit from 85 per cent to 80 per cent for HDB loans means buyers have to provide a 20 per cent down payment, up from 15 per cent before.
“The market is already very competitive, and we were hoping to get a home in Queenstown near my parents, even if we have to get an older flat. But now, we may have to delay our plans due to the higher down payment,” she said, noting they would have to fork out more than $120,000 for a four-room flat with a 70-year lease that costs more than $600,000.
Ms Teo is among some young couples concerned about how the latest cooling measures could delay their plans to buy a home due to tighter rules on HDB loans.
The measures include a 15-month wait for private home owners who want to buy resale flats, and a new interest rate floor of 3 per cent for HDB Loan Eligibility (HLE) letter applications from Sept 30, which reduces the maximum loan that can be taken.
These curbs came just nine months after the previous round of curbs, when the LTV for HDB loans was reduced from 90 per cent to 85 per cent.
Ms Teo said that even with about $80,000 in housing grants, the increase in down payment means she and her fiance will likely have to get a smaller unit or wait to build up their savings.
With their HLE expiring in December, she said, they are running out of time before their loan is subject to the interest rate floor.
“We can still get married and live with either of our parents, but we prefer having our own space and privacy,” she said.
Another buyer, who wanted to be known only as Joanne, 24, said a 20 per cent down payment was “a pretty huge deal” as she is looking for a five-room flat in Toa Payoh or Marymount with her husband, 28.
“We’ve been looking since March, but many homes there are asking for more than $1 million. We’ve actually readjusted our budget a few times, but the prices were increasing faster,” said Joanne, who works in finance.
She hopes the property market will cool after the curbs, and is prepared to wait for one to two years before buying a flat.
“We hope to have two or three children before my husband turns 35. We’re able to rent a one-bedroom condo my husband’s parents own in the meantime, but we hope for a bigger home before having kids,” she added.
An accountant who wanted to be known only as Mr AJ, 30, worries that the curbs will drive up prices of four-room flats, as private home owners who are at least 55 years old can buy a four-room or smaller resale flat without restrictions.
He and his wife, 25, are looking for an older four-room flat in the mature town of Tampines and Pasir Ris, to be near his parents.
“Sellers are still refusing to budge on their asking prices,” he said, adding that high cash over valuation (COV) is a major deterrent in deciding whether to buy a home. COV is the amount a buyer has to pay in cash when a resale flat is sold above its actual HDB valuation.
He said that although the increased 20 per cent down payment was manageable thanks to housing grants, most sellers are asking for COV above his budget of up to $20,000 in cash. “(The owner of) a badly maintained home that was built in the 1990s was asking for about $50,000 COV – it’s not a fair deal from a first-time buyer’s perspective,” he said.
Meanwhile, private property owners who hope to downgrade to a resale flat said renting for 15 months is not feasible, while HDB sellers have received lower offers since the curbs kicked in.
Aspiring HDB upgrader Wendy Ho was hoping to sell her five-room Build-To-Order flat in Punggol, which will reach its minimum occupation period at the end of October, for $750,000. But interested buyers who wanted to downgrade had to rescind their offers due to the new wait-out period.
“We were a step too late – we didn’t grant an option to purchase fast enough,” said Ms Ho, 34, who works in marketing. “Now, other buyers, especially first-timers, are not able to make a similar offer.”
Ms Ho and her husband, 35, said they will hold off on plans to move to a condominium or HDB flat closer to the city centre.
A private property owner who wanted to be known only as Mr Ashiq, 41, intends to sell his two-bedroom condo to buy a resale five-room flat or an executive apartment, so his two children have more space to play.
Renting is not an option to ride out the wait-out period, as the rental market is “too insane”, he said. “The best option we have right now is to stay put and hope the temporary measure gets lifted by next year.”
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