HDB has raised the income ceiling and grant amounts for BTO flats. Does this indicate that new flat prices are high?

Posted on 08 Sep 2015 |

The increase in housing grants and the raise in income ceiling for purchasing subsidised flats do not indicate that new flat prices are high. It is a tangible demonstration of the Government’s continued support to help Singaporeans afford their first home. There are thus good reasons for implementing them.

New flat prices have remained stable for the past few years, as BTO flat prices are delinked from resale flats. They do not follow the same extent of fluctuations that the resale market goes through. The increased grant amounts will make BTO flats more affordable for more first-time flat buyers, and middle- and lower-income families.

HDB also recognises that incomes have increased, and wants to let those who would have been ineligible under the previous income ceiling buy an HDB flat. The higher income ceiling will enable more families to own an HDB flat and enjoy the benefits of living in HDB towns. With this change, more than 8 in 10 citizen households can buy a subsidised HDB flat and take up an HDB concessionary housing loan.

Flat buyers who make realistic and prudent flat purchase decisions will find that the recent revisions will actually reduce their mortgage loans, and those from the lower income group would feel the most significant impact.

Take a look at these two examples of families from different income groups and how the increase in grants will help them.

Example 1: Family with a monthly income of $4,000 buying a $295,000 4-room flat

This family uses their savings to pay the 10% downpayment for their flat, and uses the increased Special CPF Housing Grant to offset the remaining flat price. With this, they would pay about $955 monthly over 25 years; $920 through CPF and a minimal $35 in cash.


Before increased SHG
After increased SHG
Price of a 4-room flat
$295,000
Savings used for 10% downpayment
$29,500
Additional CPF Housing Grant (AHG)
$15,000
Special CPF Housing Grant (SHG)
$20,000
$40,000
Remaining Amount Payable
$230,500
$210,500
Monthly Instalments (25-year loan)
$1,046
$955

Example 2: Family with a monthly income of $1,000 buying a $110,000 2-room Flexi flat with a 99-year lease

This family uses the increased Special CPF Housing Grant to offset the downpayment, and would only need to pay $30,000 for their flat. With a smaller loan, they would pay $137 monthly over 25 years, entirely through their CPF Ordinary Account monthly contributions of $230.


Before increased SHG
After increased SHG
Price of 2-Room Flexi Flat
$110,000
Additional CPF Housing Grant (AHG)
$40,000
Special CPF Housing Grant (SHG)
$20,000
$40,000
Grant used for 10% downpayment
$11,000
$11,000
Grant used for balance flat price
$49,000
$69,000
Remaining Amount Payable
$50,000
$30,000
Monthly Instalments (25-year loan)
$227
$137