Downgraders’ 15-month wait will moderate demand for HDB resale flats: Desmond Lee
Downgraders’ 15-month wait will moderate demand for HDB resale flats: Desmond Lee. According to National Development Minister Desmond Lee, the 15-month waiting period imposed on current and former private property owners will reduce demand for Housing Board resale flats and keep them affordable, particularly for first-time home buyers.
This is because private residential property owners usually have greater resources to purchase resale units than first-time home purchasers or existing HDB flat owners, according to Mr Lee in a video statement broadcast on his ministry’s YouTube website on Friday evening. “Some buyers may not even require financing to complete their acquisition. As a result, people tend to spend more in terms of cash over valuation (COV) when purchasing resale apartments “He stated this.
COV is the difference between a resale apartment’s sale price and its genuine HDB valuation. The buyer can only pay the difference in cash. Private house owners must now wait 15 months after selling their current property before purchasing a non-subsidised HDB resale apartment as of Friday. Those aged 55 and above who transfer from a private home to a four-room or smaller HDB resale property, a two-room flexi flat, or a communal care apartment built for seniors are exempt.
Mr Lee also noted that those with legitimate housing needs or who suffer mitigating circumstances would be excluded on a case-by-case basis. “We expect this to be a short-term solution. We will reconsider based on overall demand and market trends.” Mr. Lee was making a reference to the 15-month wait. The current set of cooling measures attempts to prevent overborrowing in both the HDB resale and private housing markets, both of which are overheating. It comes barely nine months after the previous set of rules went into effect.
On Friday, two substantial changes to the maximum amount that can be borrowed for a home loan went into effect. The first stage is to raise the medium-term interest rate floor, which is used to measure and analyze borrowers’ repayment ability and, thus, loan eligibility. The second change is a lower loan-to-value limit, which means buyers can borrow less from HDB to finance their house purchase than previously.
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