New measures set to stabilise HDB prices

The HDB has announced several new measures aimed at stabilising prices in the public housing market and guarantee more opportunities and homes for first-time owners.

Among these key changes was the revision of the Minimum Occupancy Period (MOP) from three years to five years for the resale, subletting and private property purchase by HDB flat owners. These measures also apply to non-subsidies flats.

In addition, private property owners purchasing a resale HDB flat must now dispose their private property within six months from the date of the flat acquisition.

“The raising of the MOP to five years for the resale and subletting of the flats is mainly to enforce owner-occupation,” said Mr. Mohamed Ismail, chief executive of PropNex. “The new restriction of a five-year MOP before the purchase of private property is to encourage those with the ability and intention of purchasing private property in the near-term to opt for that instead of buying a HDB flat.”

“This new restriction still allows Singaporeans to invest in property,” added Mr. Ismail. “They are merely encouraged to exercise greater financial prudence by not juggling two mortgages at once.”

Mr. Ismail said the directive to dispose private property when buying an HDB flat is likely to have great ramifications in the industry. He added that the measure is aimed at reducing short-term investment and speculation in an attempt to curb prices in the HDB resale market.

As the measures take immediate effect, Mr. Ismail expects a 10 percent half-on-half decline in the number of HDB resale transactions for H2 2010 from 17,598 in H1 to 15,800. Resale transactions for next year are likely to decrease by 20 percent, due to the lack of speculative near-term investors, he added.