Government raises income limit for BTO flats to S$10,000

Prime Minister Lee Hsien Loong indicated that couples who were about to exceed the current $8,000 ceiling may "get some relief".

Minister Mah Bow Tan said on Tuesday that a review of the income limit "would be conducted after the GE and was expected to be completed within six months."

In a statement, OCBC Research said that an impending rise in the income limit is likely this year given the soundbites from both ministers in national media.

An increase in the monthly income imit would now allow first-time buyers and HDB up-graders in the $8-10K bracket to examine BTO flats as an option.

In contrast, previous buyers were only able to choose between resale HDB flats, DBSS/EC or private residential units.

OCBC expects the government's move to have a cooling effect on primarily HDB resale prices as some demand shifts to the BTO space.

The bank noted, however, that the timing and size of the impact is uncertain as of now.

OCBC said the resulting increased demand for BTO flats also means HDB is more likely to hit its target of supplying 22K new units this year and keep up a strong pace of supply going forward (22K units in 2011, 16K in 2010 and 9K in 2009).

Amid the popular belief that the cooling measures were mostly pre-election moves, OCBC said the GE could be a positive catalyst for property prices and said the “hawkish stance” on property prices will stay.