By now, you should have heard about the cooling measures announced close to midnight yesterday, a move to prevent any rush of option issuance at the eleventh hour. The first time we witnessed a release at this timing!
How this is going to impact you?
We did a very quick analysis on the new set of cooling measures, and it is not going to have a huge impact. So don’t worry!
ABSD
– Impact will not be huge on SC/SPR 1st timers either by sell-buy, decoupling or trust. Lately, most of the buyers are under this category.
– Impact will be huge on foreigners with the increase from 20% to 30% ABSD
– Risk on developers will increase significantly since ABSD has increased from 25% to 35% if they don’t sell every single unit within the 5 years time frame. So they will bid more prudently
– With this increased risk, developers will avoid larger land plots so they can meet the 5-year timeline, so this will put a slow on en-bloc for larger land plots
– Government will be increasing land supply for both private and public housing, so we will see more GLS lands being released over the course of time
TDSR decreased from 60% to 55%
– Impact is also not huge because the increased income required for this 5-point reduction is not massive
– Please see below for a quick computation:
Based on 30 years of loan tenure, for a $1M loan
•60% TDSR: $7485 income required
•55% TDSR: $8166 income required
•Difference in income required: Only $681 for every $1M loan
HDB loan dropping from 90% to 85%
– No impact on HDB buyers taking bank loans as LTV remains at 75%.
– HDB buyers who qualify for HDB loans will now be required to fork out more cash or CPF
– Please note that in order to qualify for the old 90% LTV for HDB loans, complete resale applications (both buyer and seller) must be submitted to HDB before 16 Dec 2021
– Computation as such:
Based on $500K HDB
• 90% Loan: $50K Cash/CPF required
• 85% Loan: $75K Cash/CPF required
• For every $100K of the purchase price, extra Cash/CPF is only $5,000
With this quick analysis, you will realise the impact is not as huge as it seems.
Smile and welcome 2022 with confidence 😊
