Will an increase of the income ceiling of the HDB affect other home prices in Singapore? Part 1

During the National Day Rally speech, Prime Minister Lee Hsien Loong said that the income ceiling rates of the BTO flats or HDB build to order flats would be raised from $8,000 to at least $10,000. The Prime Minister also decided to increase the executive condominium prices from $10,000 to $12,000. This gives us the implication that any couple’s total income per month should fall below $8,000 per month. This is almost 30% lower the resale flats in Singapore.

The plan would be raising the income ceiling of the studio apartments to about $10,000 with 4 or 5 room flats. This income ceiling is the same as the mature town estates with 3 room flats. For the nonmature town estates, the income ceiling would be raised to $5,000. The other 2 room flat will have a slight increase to $2,000.

Singapore preview of the HDB flats supply and demand

To give you a small overview about the HDB, HDB stands for Housing and Development Board. This is the housing provision in Singapore that manages low cost housing projects. The agency was created in 1960 to replace the Singapore Improvement Trust. It represents a 5 year low housing building program aimed to provide the lowest housing prices.

In 2010, the increase in the income ceiling was implemented by the HDB. The program was meant to cover the low income population in Singapore. There has been larger demand of HDB flats but definitely lower supply. Based on the local statistics from HDB, the needs of the local population had been increasing as this included the Permanent Residents, foreigners, and other migrant workers.

Based on careful estimates derived from statistics forecasting and computations, the supply for the HDB flats is under 100,000 units. This was based on the forecast that couples would be marrying each year. Estimated marriages would be about 22,000 to 25,000 each year.

Related posts:

1. SINGAPORE PROPERTY PRICES CONTINUE TO RISE IN 2010