The latest HDB policy changes may bring along with it an increase in demand for older resale flats and perhaps executive condominiums (ECs) in particular.
Resale HDB flat demand and price may not increase proportionately
The main changes which were announced last week were a new HDB housing grant and raised income ceilings.
Analysts are expecting the prices for resale flats to remain fairly stable as the Government is likely to ramp up the supply of new flats to allow young couples to secure a unit of their choice directly from the Housing Board (HDB).
Hence, demand for older resale flats may not necessarily spike due to these recent policy shifts. While prices may increase with inflation accordingly, they are expected to remain stable overall. The situation, however, may be different from ECs.
The income ceilings for these hybrid property types have been raised from $14,000 to $16,000. This may allow for more applicants to vie for these units which are scarce in comparison to resale HDB flats.
ECs are a hybrid between the public and private property where applicants are able to take advantage of government subsidies. After a 10-year period, these properties move from being public housing to the private property market, which could fetch higher selling prices.
Low supply of ECs may increase demand
As the land supply for ECs has been and is likely to continue to be low, supply in the short term may also reflect this scarcity. Developers are required to wait 15 months before they can launch EC projects after acquiring the land.
While the government may sell more land parcels allocated for these properties, the earliest time any new ECs will be launched is in 2021.
The only EC launched this year is Piermont Grand in Punggol.
In the meantime, demand for ECs may increase due to the raised income ceilings which allow more applicants to qualify for government grants and subsidies when applying for these units.