Property analysts CNA spoke to on Tuesday ( Aug 20 ) and said the tightening of the Housing and Development Board ( HDB) loan limits may slow down demand in the short term but it will have a small impact on prices in the long run.
Late on Monday, HDB and the Ministry of National Development ( MND ) announced that the loan-to-value ( LTV ) cap for HDB loans will be lowered from 80 % to 75 %, thereby lowering the maximum amount that home buyers can borrow from HDB.  ,
Since December 2021, when the LTV for HDB loans was lowered from 90 % to 85 %, this set of property cooling measures is the fourth. It was  , further reduce to 80 per cent , in September 2022.
Mr Lee Sze Teck, top producer of data analysis at Huttons, said , the sale need may decrease briefly in the near term as purchasers take inventory of the new measures.
But, over time, he said demand will return and costs will continue to rise.
Mr Lee added that an estimated 7, 000 cottages may reach their maximum job time ( MOP) next yr- lower than this year’s estimated 12, 000 cottages. As such,  , he said HDB resale prices may continue to rise next year.
There is also a “possibility” that there may be more gains in the prices of two-room and three-room resale flats, according to Mr Lee.  ,
He claimed that most buyers for four-bedroom and larger flats do not see an increase in grants and use bank loans for their purchases, so the most recent cooling measures are of” no difference to them.”
However, prices are likely to increase as a result of the lower supply of 4- and 5-bedroom apartments that are currently available on the open market after passing the MOP ( minimal occupation period ).
Mr. Nicholas Mak, the chief research officer at property technology portal Mogul, shared his thoughts. Sg, who agreed that the measures will have a constrained effect on the market.  ,
” It will probably slow down the rising prices of HDB flats but… this measure cannot be used alone, it has to be used in conjunction with… a steady, strong supply of Build-to-Order ( BTO ) flats because this measure only addresses the demand side of the equation, it does not address supply side”, said Mr Mak.  ,
He added that those who are currently in financial predicaments will be affected by the tightening of loan limits.
” This group will try to max out their loan-to-value ratio, their total debt servicing ratio… to buy the HDB flat”, he said.
FINANCIAL PRUDENCY
In a television interview with CNA presenter Elizabeth Neo, Professor , Sing Tien Foo,  , provost’s chair professor in the real estate department at the National University of , Singapore’s business school, said the reduction in loan-to-value limit can help to boost financial prudency of buyers especially in the HDB resale market.  ,
He noted that in the first two quarters of this year, HDB resale property prices increased by about 4 %  .
” A lot of these are driven by the mature HDB market transactions, especially the more expensive transactions in the first half of the year” , , said Prof Sing.  ,
I believe that this action is intended to actually slow down or stabilize the resale market rather than to dampen property prices, particularly in the resale market.
He questioned whether additional steps could be taken to reduce the private property sector, despite the high prices that are still present.  ,
” I believe it’s crucial to actually keep an eye on the situation without actually making too early an intervention. At the moment, I think this can actually bring uncertainty to the market”.
RAISING OF GRANTS COUNTERINTUITIVE?
The enhanced , Central Provident Fund ( CPF ) Housing Grant, which will see eligible , first-timer families get up to , S$ 120, 000, up from the current , S$ 80, 000 limit, will benefit lower-income groups the most, said property analysts.  ,
With no restrictions on the location or type of flat, the amounts are distributed according to household income.
Depending on the monthly household income, the increase will range from S$ 5, 000 to S$ 40, 000 for families and from S$ 2, 500 to S$ 20, 000 for singles, with higher increases for lower-income households who require more support.
” The cooling measures (tightening of HDB loan limits ) is a broad-based measure, regardless of income level, but at least the grants will help to cushion this for the lower income bracket. The lower their income, the bigger the cushion”, said Mr Mak.
Ms , Christine Sun, chief researcher , and strategist at OrangeTee Group, noted the measures seem to be” carefully calibrated”.
Despite the lower LTV, those who require financial assistance, such as those in the lower income groups and first-time buyers who are eligible, will still be able to afford an HDB flat because they will be receiving more assistance, she said, in the form of the enhanced CPF Housing Grant.  ,
” This is a good move as the measures will likely be more targeted”, Ms Sun added.
Mr Lee said this might also, conversely, encourage some buyers to spend more on their house.  ,
” When you increase the grant, there’s a possibility that people can take this amount… and pay more or the seller may ask for more money”, he said.  ,