Last week's Budget provided additional support for families on several fronts, including the perennial need to make public housing affordable for different segments of the population. The CPF Housing Grant has been increased from $30,000 to $50,000 for couples who purchase four-room or smaller resale flats, and from $30,000 to $40,000 for couples who purchase five-room or bigger resale flats. Together with the Additional CPF Housing Grant and the Proximity Housing Grant, a couple can now receive up to $110,000 in housing grants when buying a resale flat, depending on its location and type and on their income.
This is a substantial subsidy which will help first-timer families to get a home faster and in a location of their choice. The difference between grants for smaller and bigger flats reflects the need to target the use of public money carefully so that it helps the less well-off more. Also, it signals to Singaporeans the need to be prudent about their housing expenditure. Those aiming for larger flats must consider their budgets, without expecting bigger subsidies. As it is, the measure will cost an additional $110 million a year.
For all the ways in which public housing policies change, their purpose must remain constant: the provision of such housing for the achievement of national ends. Encouraging young people to marry and have families is crucial to the long-term survival of Singapore. More Singapore babies also help to preserve the essence of an open and bustling hub city. Any policy change that furthers such goals is worthwhile.
The enhanced benefits would help both HDB buyers and sellers. Young couples looking for a flat would find it easier to consider the resale option compared to the Housing Board's Build-to-Order (BTO) route, where couples apply to ballot for a chance to select a flat in proposed sites. Given the demand for BTO flats, resale units made more affordable could be a viable option for some couples, including those who wish to marry soon and settle down close to parents.
Sellers would benefit from a recovery of resale transactions. But one would hope that prices will not rise in tandem with the latest grants. Given the uncertain economic climate, some caution ought to prevail in the market. From an economic point of view, there are still sound reasons to avoid diluting property cooling measures. The latter move would affect the market at large, and could have an impact on business operators, who are feeling the pinch of high rentals.
The calibrated approach adopted in the Budget reiterates the virtue of taking a segmented view of demographic change in Singapore. Ideally, the latest measures should help to stabilise demand and supply while making HDB resale flats more accessible to those seeking space in which to start new families quickly.