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. The 15-month wait-out period placed on current and former private property owners, according to National Development Minister Desmond Lee, will curb demand for Housing Board resale flats and keep them affordable, particularly for first-time home buyers.
According to Mr Lee in a video statement released on his ministry’s YouTube page on Friday evening, this is because private residential property owners frequently have more resources to purchase resale units than first-time home buyers or existing HDB flat owners. “Some purchasers may not even need finance to complete their purchase. As a result, when they buy resale apartments, they tend to pay more in terms of cash over valuation (COV) “He expressed this.
COV is the difference between the sale price of a resale apartment and its true HDB valuation. Only the difference in cash can be paid by the buyer. As of Friday, private home owners must wait 15 months after selling their current property before purchasing a non-subsidised HDB resale apartment. Exempt are those aged 55 and above who move from a private house to a four-room or smaller HDB resale property, a two-room flexi flat, or a communal care apartment built for seniors.
Mr Lee also stated that HDB would exclude those with valid housing needs or who face extenuating circumstances on a case-by-case basis. “We anticipate that this will be a temporary solution. We will rethink this in light of overall demand and market changes.” Mr. Lee was alluding to the 15-month wait. The current set of cooling measures aims to prevent overborrowing in both the HDB resale and private housing markets, which are both showing indications of overheating. It comes just nine months after the previous set of regulations were implemented.
Two significant modifications to the maximum amount that can be borrowed for a home loan went into effect on Friday. The first step is to boost the medium-term interest rate floor, which is used to assess and analyze borrowers’ ability to repay and, as a result, their loan eligibility. The second change is a reduction in the loan-to-value limit, which implies that buyers can borrow less from HDB to finance their property purchase than previously.
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