HOUSING AND DEVELOPMENT BOARD FLATS (Enhanced incentives for first-time buyers)

Dr Lily Neo asked the Minister for National Development whether his Ministry will further enhance incentives for first-time buyers of Housing and Development Board flats so as to assist young couples start their homes and families earlier.

The Minister of State for National Development (Dr John Chen Seow Phun) (for the Minister for National Development): Mr Speaker, Sir, the HDB has several schemes to assist young couples to start their homes and families earlier. Firstly, HDB flats are sold at subsidised prices to ensure that they are affordable to young couples. Next, HDB provides mortgage financing at concessionary interest rates to first-timers. HDB flat buyers can make use of their CPF savings to pay the 20% downpayment.

HDB also has a Fiance/Fiancee Scheme whereby young couples intending to get married can apply for new HDB flats before their marriage. For those on the Registration for Flat System, HDB allocates more flats to first-timers compared to upgraders, to enable the former to start up their homes earlier. Today, first-timers can select their HDB flats within one to one and a half years from the date of application. If they select completed flats, they can take possession of the flats within a few months from selection.

Furthermore, first-time purchasers can buy resale flats or Executive Condominiums with the CPF Housing Grant Scheme. The grant of $30,000 to $40,000 will help to defray the initial cost of purchase of their resale flats or Executive Condominiums.

Dr Lily Neo (Kreta Ayer-Tanglin): Sir, may I ask the Minister of State whether he would consider raising the loan ceiling for first-time buyers from 80% to 90%, similar to the existing schemes available for joint selection multi-tier family and confirmed Government officers?

Dr John Chen Seow Phun: Sir, the requirement of 80% is a prudent practice to ensure that buyers will buy flats within their affordability. We also have schemes to help low-income families to obtain a bigger mortgage financing. For ordinary first-timers, it is best that they stick to the 20% deposit. But if they have financial difficulty, they can always appeal to their MPs and we will look at the case on its own merit.

Dr Lily Neo: Sir, on the question of affordability, may I inform the Minister of State that, in fact, there are already affordability criteria, such as maximum quantum and maximum repayment period. The criteria are already in place. What is the worry on that?

Dr John Chen Seow Phun: Sir, the credit assessment that we have is to ensure that people buy flats within their affordability. The 20% downpayment is also prudent market practice in the private sector, and this policy is to make sure that people have enough savings before they actually start thinking of buying a flat. So I think it is quite a prudent approach.