Update on Goal to Keep House Price-to-Income Ratio of Four for HDB BTO Flat Buyers

Ms Hazel Poa asked the Minister for National Development whether it remains a policy goal to achieve a House Price-to-Income ratio of four for HDB BTO flat buyers since the Ministry's announcement of this goal in 2013.

Mr Desmond Lee: As explained before in this House on multiple occasions, the Government tracks a holistic range of indicators, such as the Home Price to Income Ratio (HPI) and Mortgage Servicing Ratio (MSR), and adjust our subsidies as necessary to ensure that Build-to-Order (BTO) flat prices remain affordable across different income levels. Compared to the HPI, the MSR is a better reflection of the proportion of income used to service a housing loan and takes into account more details, such as the housing loan amount, loan tenure and mortgage loan interest rates.

Our commitment to ensuring housing affordability has not changed. For instance, when we looked at First-Timer families who collected keys to their BTO flats last year with a Housing & Development Board housing loan, more than nine in 10 had an MSR of less than 25%, which means they can service their mortgage payments using their Central Provident Fund contributions with little or no cash outlay.