Government's household income ceiling raise boosts first-time BTO flat buyers

Households earning $3,000-$5,000 a month now have the chance to purchase 3-room flats that provide them more freedom in their other financial commitments.

The Government’s announcement on Thursday to raise the monthly household income ceiling, from $3,000 to $5,000, for first-timers buying 3-room Build-to-Order (BTO) flats in non-matured estates will be seen as a welcome move for many in the lower-middle income bracket, according to a PropNex report.

“About 20% of our population have a monthly household income of between $3,000 and $5,000,” says PropNex Corporate Communications Manager Mr Adam Tan. “These people have previously been forced to buy a 4-room or larger flat, which may be stretching their budget, especially considering the substantial price difference between 3-room and 4-room BTO flats.”

He cites the recent BTO offerings in Sengkang on 28 February 2011, where 3-room flats cost about $170,500, as compared to $275,500 for a 4-room flat.

Giving them the chance to purchase 3-room flats, he says, will allow them more freedom in their other long-term financial commitments, such as raising their children, medical bills and taking care of aging parents.

“It also makes sense for the income ceiling to be raised only in non-matured estates,” Mr Tan adds, “as BTO flats in matured estates will be more costly anyway, and would still be rather unaffordable for those targeted income brackets.”

In conclusion, Mr Tan lauds the Government’s decision to apply this move to the recent BTO projects. “It means that the households which do earn between $3,000 and $5,000 a month can enjoy this new policy immediately.”