When public housing prices becomes unaffordable, it has to be ‘cooled down.’

When public housing prices becomes unaffordable, it has to be ‘cooled down.’

Do you know that when home prices become totally unaffordable, the government of the day will feel the pressure because if people could afford a property, they will be happy but if they could not find anything which they could afford, then the tension will start to simmer. Not a great news for any government of the day. This is why the Singapore government is taking steps to ensure the warm to hot public housing transactions are cooled down before it gets too hot to handle.

Article in msn.com Under the new measures, loan-to-value limits, which determine the maximum amount an individual can borrow from the HDB, will be lowered to 75% of a property’s price or value from 80%. The limit on loans from commercial banks will remain at 75%. The changes kicked in from Aug. 20 and will apply to transactions in the secondary market as well as new units known as Build-To-Order flats starting in October.

“Given the sustained, strong, broad-based demand for HDB resale flats, these measures will help cool the market and encourage prudent borrowing,” according to the statement. 

The government will also increase housing grants by as much as S$40,000 to improve affordability for lower-to-middle income first-time home buyers. Do read the full article with a lot more details: Article in msn.com

Ensuring affordable properties are available is critical

When the people could not afford a property or have to struggle too much just to buy a property, it spells bad news for the property market too. It meant that prices have become unsustainable yeah. When it’s too high, demand will fall and the supply would have to readjust its prices so that people could still buy them.

However, not all affordable properties are built equal. Some are in places nobody wants. Some are in the right places but have since become badly maintained. Some are just too small for it to become a family home. This is why we need to research and know the demand first and even if private developers want to build them, it’s time we get serious and analyze if the demand will be coming or not.

For most people, I would advise to buy a property which is still affordable to us. Just need to remember that no governments can force transactions to be at a price they want instead of what the seller wants yeah. They will try to put up some measures to slow down or to discourage but they cannot ask everyone to sell at the price the government wants yeah. So, owning a property is likely to be more beneficial than not owning one.

Happy understanding.

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