Some get up to $88k in subsidies, says Mah Bow Tan; also flats still cheap enough for families to use CPF for full mortgage payments
PROPERTY prices may be on the rise but HDB flats still remain very affordable for the average Singaporean, National Development Minister Mah Bow Tan emphasised yesterday.
That is because families have access to subsidies which can go as high as $88,000 for some households, he noted.
And flats are still cheap enough for families to be able to fund their mortgage instalments entirely from Central Provident Fund (CPF) contributions – without the need to stump up cash.
Mr Mah made these points at a Chinese New Year dinner at the Tampines East Community Club yesterday.
With HDB resale prices rising about 17.5 per cent last year, he said he is well aware that younger Singaporeans are becoming increasingly concerned about the affordability of HDB flats.
He reiterated the Government’s commitment to providing affordable public housing and said there were two ways to achieve this.
One was to give big housing subsidies to help newly-weds buy their first HDB flat. The other was to provide mortgages at a concessionary interest rate.
In terms of subsidies, an Additional CPF Housing Grant (AHG) introduced in March 2006, provided lower income families with an additional grant of between $5,000 and $20,000 to buy their first HDB flat.
The income ceiling for this grant was raised from $3,000 to $4,000 to allow more families to benefit. And the grant limit was also increased by $10,000 so that the highest tier grant is now $30,000.
Mr Mah said: ‘A recent Ministry of Finance simulation estimated that the typical young low-income household could enjoy housing subsidies worth about $88,000.’
He also revealed that HDB’s records show that recent buyers of new HDB flats use only about 20 per cent of their monthly household income to service their housing loans.
‘This means that families can service their housing loan entirely from their CPF Ordinary Account contribution, without any cash outlay,’ he noted.
In any case, rising resale prices seem also to have stabilised for now so there is no need for buyers to rush in at this point, said Mr Mah.
‘The HDB Resale Price Index grew by only 1 per cent last month, and we expect prices to grow at a more moderate pace in 2008,’ he added.
Mr Mah also noted that the proportion of resale transactions with a positive cash over valuation, as well as the median cash over valuation also dipped marginally last month.
He said HDB will continue to monitor the situation closely.
Source: The Straits Times 18 Feb 08