New property measures protect Singapore homeowners

Considered most notable is the extension of the second HDB concessionary loan to downgraders.

"This is certainly welcome news, especially for existing HDB owners without a strong credit standing," commented PropNex CEO Mr Mohamed Ismail, explaining that people who may be in a difficult financial situation usually find it hard to secure a bank loan after selling their initial property as their credit background is weak.

His comments followed after the Government announced new property measures to further safeguard the interests of Singaporeans whose property purchase is primarily not for financial investment but for residence.

According to PropNex, the second HDB concessionary loan is extended to downgraders on condition that they are only allowed to keep 50% of the cash proceeds from the sale of their initial property or $25,000, whichever is higher, and the rest must be used to finance the second flat.

"Allowing these people to unlock 50% of their cash proceeds while still qualifying for the HDB bank loan will certainly be helpful to downgraders," said Mr Ismail, "and we may see an increase in market activity due to an increase in downgraders."

Another measure announced, modelled after the Ethnic Integration Policy (EIP), is the quota cap of 8% PRs in each block and 5% within each neighbourhood. The Singaporean Permanent Resident (SPR) Quota applies to all PRs except Malaysians who, like all PRs, have to follow the EIP.

There will also be a reduction of $10,000 in the CPF Housing Grant for couples which consist of one Singaporean Citizen and one Permanent Resident (PR), wherein the $10,000 will be granted or returned once the PR spouse becomes a Singapore Citizen, or when the couple bear a child who is a Singaporean Citizen.

"These moves should allay the fears of those Singaporeans who feel that PRs are partly to blame for driving up HDB resale flat prices," said Mr Ismail, adding that PR population only accounts of 8% of the HDB dwellers, their impact on prices so far has been minimal at most.

Meanwhile, the Minimum Occupation Period (MOP) for buyers of HDB flats without CPF Grants was raised from 1 year and 2.5 years for bank loans and HDB loans to three years regardless, which Mr Ismail believes at most will encourage buyers to adopt a mid-to-long term view in their property purchases.