14 February 2023
Deputy Prime Minister and Finance Minister Lawrence Wong delivered the Singapore Budget 2023 in Parliament today, with the Budget’s theme being “Moving forward in a new era”.
And among the key announcements, new measures are introduced to address raising concerns in the property market in Singapore such as the long waiting time for BTO and affordability of resale HDB flats
In this article, we will dive in the new housing measures announced from the speech and our opinions from that.
BTO Balloting is going to give families with children and young married couples aged 40 years old and below an extra chance to ballot. This new rule will be in place later this year. HDB provides BTO flats that cater to the housing requirements of different buyer segments, such as First-Timer families, Second-Timer families, seniors, and singles. The majority of the BTO flat supply by HDB is earmarked for First-Timer families, given their urgent housing needs. Moreover, First-Timer families are offered a higher number of ballot chances than Second-Timer families. The Government’s dedication to making public housing reasonably priced and easily obtainable for Singaporeans remains steadfast. The measures unveiled today complement the existing initiatives that address the current scarcity of BTO flats, and empower more genuine first-time applicants to acquire their inaugural home.
The CPF Housing Grant has also been increased for eligible First-Timer families and singles who are purchasing resale flats. Families who are eligible and buying 4-room or smaller resale flats can now get an additional grant of $30,000, and those buying 5-room or larger flats can get an additional $10,000. Eligible First-Timer families purchasing resale flats can benefit from this increased grant from April 2023.
Singles who are eligible and buying 4-room or smaller resale flats can now get an additional grant of $15,000, and those buying 5-room or larger flats can also get an additional $15,000. Eligible First-Timer singles purchasing resale flats can benefit from this increased grant from April 2023. See table below.
The cost of buying resale HDB flats has gone up by almost 31% between Q1 2020 and Q4 2022. To help buyers cope with the high prices, the government has increased the CPF Housing Grant by a lot. Eligible first-time buyers can now get up to $190,000 in grants to help pay for their resale flat. This can help them pay less for their down-payment or take a smaller loan. People who want to buy 2-room to 4-room flats will get more money in grants than before. This could encourage families to buy flats that are just the right size for them, which could help reduce demand for bigger flats.
But there’s another side to this. Because there aren’t many resale HDB flats for sale, more people might want to buy them now that they can get a bigger grant. This could keep the prices high. Some sellers might also ask for more money because they know buyers can get a bigger grant. But if they ask for too much, buyers might not want to buy from them. Most people are still looking for a good deal.
The government has announced an increase in the Buyer’s Stamp Duty (BSD) for residential properties. Properties valued between $1.5 million and $3 million will be taxed at 5%, while those valued over $3 million will be taxed at 6%. This follows the increase in property tax rates that were announced in the 2022 Budget and is another measure aimed at generating revenue to fund government spending.
While this increase in BSD may cause concern for some buyers, we do not anticipate it will significantly impact home sales. For those purchasing homes in the price range of $1.5 million to $3 million, the additional amount payable in BSD is manageable. For instance, a buyer who purchases a residential property valued at $2 million will see their BSD increase by $5,000, as illustrated in table below. While this is an increase in costs, it is not expected to have a significant impact on the overall property market.
