On 30th Sep 2022, the Singapore authorities announced a series of Property Cooling Measures. The question is : HDB flats or Private Property : Which is more affected by cooling measures
According to the authorities, the new measures are aimed at ensuring prudent borrowing and moderating demand.
Under the new measures, the medium-term interest rate floor will increase by 0.5% to compute TDSR and MSR. There is also a 15 months wait now to buy HDB resale for private property owners.
HDB flats or Private Property : Which is more affected by cooling measures : Impact on Private Property
Compared with the HDB market, the ultimate impact of the new cooling measures will be smaller for the private residential market.
This is because most of the recent measures were targeting the high-end HDB resale market. This is because the key focus area of measures was to keep the HDB market, which is home to 80% of the population, affordable.
The government cannot continue to be allowed to be seen as not in control of the public housing market where as many as 231 HDB flats have crossed the $1m threshold in the first eight months of 2022.
More significantly, HDB resale prices are up 5% in 1H22 after a 12.7% increase last year !
HDB flats or Private Property : Which is more affected by cooling measures : 15 months wait
The introduction of a 15-month wait out period for private residential property owners and the increased LTV for HDB loans should cool this demand at the top end of the HDB market.
On the private property side, the mass market will feel the impact of the new measures since the higher interest rate assumption in total debt servicing ratio (TDSR) computation will likely lower maximum affordability levels.
The property cooling measures should also help reduce the crazy sentiment seen in new launches such as Lentor Modern and AMO Residences.
Given the new measures and their impact, there should be some cooling of the private property market.
The major impact will still be on the five rooms and EA and EM sectors of the HDB market.
