From last week, would-be home buyers can unlock more of their retirement savings to pay for a property.
Singapore's aging public housing has been a source of anxiety, for home owners and the government alike. It's become particularly acute in the lead up to national elections considering more than 40% of the population's wealth is tied up in the real estate.
From last week, would-be home buyers can unlock more of their retirement savings to pay for a property, so long as the remaining lease of that property is at least 20 years and covers the youngest buyer until they're 95 years old.
With many leases approaching the 40-year mark, the resale value of apartments has been dropping because there isn't clarity over what will happen at the end of the term. HDB unit resale prices fell 0.3% in the three months ended March, their third straight quarterly decline. HDB apartments with less than 60 years of the residual lease made up 14% of resale transactions in the first quarter -- the highest percentage of older flats sold on record.
The move is also politically prudent at a time the ruling People's Action Party party led by Prime Minister Lee Hsien Loong is headed for elections. Central Provident Fund monies are an important source of real estate funding: On average, more than S$10 billion ($7.3 billion) has been withdrawn each year for the past five years for property purchases.
"The amended rules could potentially increase the pool of buyers and inject more liquidity into the resale market for older flats and private leasehold homes," said Nicholas Mak, an executive director at ZACD Group Ltd. "This could help owners of older flats who previously found it challenging to sell."
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