by OrangeTee & Tie Pte Ltd.

Tighter loan limits could feed demand for smaller flats, raise rentals further, curb overall buying

Government Policies

Singapore, 30 Sep 2022

TIGHTER limits on property loans announced late last night will shrink homebuyers’ purchasing power and pinch on affordability, market analysts observed. And this could feed into greater demand for smaller flats – specifically resale 4-room Housing Development Board (HDB) flats – while also leading to higher rental rates and a slowdown in demand for private property.

There are signs that the HDB resale market may be overheated given the record prices observed across many towns and more million-dollar flats being transacted, said Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie. 

“Over the past month, about 1 to 2 flats have been sold for a million dollars every other day,” she said, adding that the latest measures were likely taken to tame HDB resale flat prices by reducing competition from private homeowners, and making it easier for first-timers to purchase their homes.

OrangeTee & Tie’s Sun thinks price growth may even move into negative territory in Q4. “We anticipate that price growth may be between 0 and -2 per cent for Q4 2022,” she said, adding that sales volume may see a more immediate impact and may fall by over 10 per cent, especially for larger flats.

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