ST : More housing options for sandwich class

Aug 30, 2010

NATIONAL DAY RALLY

More housing options for sandwich class

Those with household income of up to $10,000 eligible for certain HDB flats

By Jeremy Au Yong & Esther Teo

THE income requirements for HDB buyers have been relaxed - slightly - to give the 'sandwich group' more housing options.

Those with a monthly household income of between $8,000 and $10,000 will be eligible to buy Housing Board flats built under the Design, Build and Sell Scheme (DBSS).

Previously, their only option - apart from private property - was executive condominium (EC) units, as the income cap for HDB flats is $8,000.

DBSS flats have better finishes than from build-to-order (BTO) ones because private developers are given flexibility in designing, building and pricing the units.

Prime Minister Lee Hsien Loong announced this at the National Day Rally last night, saying it would help those currently caught in the middle.

'I think this group is quite anxious about falling in between, so they are not eligible for HDB and they can't afford private property... And because people are marrying a little bit later, their incomes tend to be a little bit higher, so they worry they will get promoted before they get settled. So we will do more to help them own their homes,' he said.

For the sandwich class, buying a DBSS will become like buying an EC: They will be eligible for a housing grant and have to arrange their own financing.

While the $8,000 ceiling stays, the move opens up thousands of mid-priced flats to the sandwich group. In July, the HDB said there were 2,280 DBSS flats and 2,445 EC units in the pipeline.

A typical four-room BTO flat costs $300,000, a DBSS unit around $500,000 and an EC, around $700,000.

PM Lee added yesterday that more land would be released for such developments.

He also said that the Government would move to cool the private property market but declined to disclose details.

'Otherwise you will remember nothing else about my speech,' he said, to laughter from the audience of 1,500.

The Ministry of National Development will set out the measures today.

On public housing, PM Lee said about 22,000 BTO units would be built next year. 'So if you miss one BTO, don't worry, the next one is coming... There are 22,000 new flats coming along and we don't have 22,000 new couples getting married in Singapore every year.'

He added that the HDB would also do its best to speed up construction. The average waiting time for a flat is three years.

And to drive home the message that HDB flats are for owner occupation, he said the rules for private property owners buying resale flats would be tightened.

The housing changes, one of the highlights at yesterday's rally, are aimed at reassuring Singaporeans that they will be able to afford a home despite the surging property market.

Housing has been a hot-button political issue this year, with many voicing concerns about the spike in prices.

The latest official figures show the prices of HDB resale flats rose 4.1 per cent in the second quarter of this year, the eighth consecutive quarter of growth. The median cash-over-valuation also hit a record high of $30,000.

PM Lee acknowledged that the influx of foreigners had an impact on demand, but said broader economic forces were also at work.

He noted that though Singapore's population hardly changed in the last two years, prices were falling until the 'mood changed' in the middle of last year.

'It's also happening in Hong Kong, in other cities around the region, in China, and therefore there are other broader factors at work. But whatever it is, it's something which we are focusing our minds on,' he said.

Property analysts and house-hunters yesterday welcomed the move to loosen the income criteria for DBSS flats.

PropNex chief executive Mohamed Ismail said the move was especially timely given the growing size of the sandwich group: 'It's a good way to ease demand without allowing the sandwich group to compete with those earning less than $8,000 for BTO flats.'

Medical professional Tay Yuxin, who is planning to marry and is looking for a home, said she was relieved as she and her boyfriend would soon bust the $8,000 cap. Said the 24-year-old: 'There was a lot of pressure to get something so this is great as it allows us to be in less of a rush and apply for something that is affordable. Also, we have more locations to choose from.'

jeremyau@sph.com.sg

esthert@sph.com.sg


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'With more double-income families, some couples have had to shy away from promotions or to quit their jobs to try to qualify for BTO flats.'

PropNex chief executive Mohamed Ismail, saying the move to raise the income ceiling to $10,000 for flats built under the Design, Build and Sell Scheme was timely as the sandwich group was growing