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Singapore’s Property Market Adjusts to New Cooling Measures: Impact on Singaporean Buyers
Singapore’s real estate market is undergoing significant adjustments in response to recently implemented cooling measures. These changes, primarily focused on the HDB resale market, are impacting Singaporean buyers and reshaping investment strategies. The key measures include adjustments to loan-to-value (LTV) limits and enhancements to CPF housing grants.
Tightening of Loan-to-Value (LTV) Limits
In August 2024, the government reduced the LTV limit for HDB loans from 80% to 75%. This change directly affects the borrowing capacity of potential homebuyers relying on HDB loans, particularly impacting those targeting larger flats in mature estates. According to Minister for National Development Desmond Lee, the reduction aims to moderate demand in this segment, where buyers often take out loans exceeding 75% of the property price, contributing to price increases in the resale market.
Analysts at PropNex Realty suggest that the reduced LTV may cool the upper end of the market by limiting borrowing capacity. OrangeTee Group’s chief researcher, Christine Sun, noted that this could encourage more conservative financial planning among buyers, potentially slowing price increases, particularly for larger flats in mature estates.
Enhanced CPF Housing Grant (EHG)
To offset the impact of the reduced LTV, the government simultaneously increased the Enhanced CPF Housing Grant (EHG). Families can now receive up to $120,000, and singles up to $60,000, significantly boosting financial support for first-time flat buyers in lower- to middle-income brackets. Previously, the EHG offered a maximum of $80,000 for families and $40,000 for singles.
While the increased EHG aims to make homeownership more accessible, concerns have been raised about its long-term effects. Nicholas Mak, chief research officer at Mogul.sg, suggested that the increased grant could lead to higher demand and a cycle of raising housing grants to keep up with rising HDB resale prices, potentially creating a price spiral.
Impact on HDB Resale Market
The immediate effect of these measures is expected to be a dampening of demand in the HDB resale market. Huttons Asia’s senior director of data analytics, Mr. Lee Sze Teck, anticipates a short-term slowdown as buyers adjust to the new cooling measures. However, he also predicts that demand will return over time, with prices continuing to rise due to a lower supply of flats reaching their Minimum Occupation Period (MOP) in 2025 compared to 2024 (7,000 vs. 12,000 flats respectively).
Despite the potential short-term dip in demand, HDB resale prices have shown significant growth in recent years. In 2024, resale prices increased by 9.6%, nearly double the 4.9% rise in 2023, driven by strong demand and limited supply. Sales of public housing units exceeding S$1 million have become increasingly common, reflecting the demand for prime properties.
Shifting Buyer Preferences and Market Segments
The cooling measures and broader market trends are influencing buyer preferences. Many HDB upgraders are shifting their focus from private properties to larger resale flats due to affordability and practicality. Families are prioritizing larger living spaces, with executive flats and 5-room units witnessing heightened demand.
The luxury property market in Singapore remains resilient. The Core Central Region (CCR) is poised for a resurgence in 2025, reflecting a shift in buyer sentiment and developer strategies. Easing foreign competition, following increased Additional Buyer’s Stamp Duty (ABSD) rates for non-residents, has allowed local buyers to dominate this segment.
Singapore Real Estate Investment Outlook
Despite the cooling measures, the Singapore property market is expected to maintain a stable and growing trend. Property prices are forecasted to rise between 3% and 5% in 2025. The Urban Redevelopment Authority (URA) All Residential Price Index increased 0.6% q-o-q and 3.1% y-o-y in Q1 2025, signaling continued growth, albeit at a more moderate pace compared to Q4 2024.
The Singapore Residential Property Price Index reached 211.50 points in Q1 2025, up from 209.40 points in Q4 2024. Long-term projections estimate the index to trend around 241.00 points in 2026, indicating sustained confidence in the market.
While the cooling measures may moderate price spikes, the long-term outlook for Singapore real estate investment remains positive, driven by strong fundamentals, government initiatives, and a thriving economy.
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