Singapore's public housing purchase policy is undergoing a significant overhaul. Starting from the second half of 2023, new public housing projects will be categorized under a new classification framework, dividing flats into three main categories: Standard, Plus, and Prime. This change marks the end of the division method used since 1992 between mature and non-mature housing estates, although existing flats and those already purchased will not be affected by the new policy.

The implementation of this new policy will undoubtedly have a profound impact on the future public housing market. Particularly, the Prime and Plus location flats will no longer be as "hot" as they used to be due to their prime locations. Under the new framework, more stringent purchasing and resale conditions have been imposed on these flats, significantly changing their market appeal.

Firstly, a Minimum Occupation Period (MOP) of 10 years will be implemented for Prime and Plus location pre-purchased flats, and these flats cannot be rented out entirely even after meeting the MOP. This restriction is intended to reduce short-term speculative activities in the market and ensure that public housing resources serve the residents who truly need them.

shicheng.news

Moreover, these flats will face strict restrictions in the resale market. For instance, the income of resale buyers cannot exceed S$14,000, and they must be Singaporeans. Former private property owners must wait 30 months after selling their private properties before they can purchase a resale flat in the Prime and Plus locations. Furthermore, when reselling Prime and Plus location flats, the original homeowners must return a portion of the housing grant according to the proportion of the resale price or market value.

For example, two Prime location public housing projects launched last year in Queenstown and Redhill involve a grant recovery rate of up to 8% upon resale, meaning the seller must return 8% of the resale price or the market value, whichever is higher.

The implementation of these new regulations may make some first-time buyers find resale flats in mature areas more attractive than new flats in Prime and Plus locations. The Business Times notes that resale flats in mature areas offer more flexibility and economic benefits, especially in terms of investment returns, for those intending to "upgrade" to private housing in the future.

Additionally, the regulations in the resale market are relatively lenient. The Minimum Occupation Period for purchasing resale flats is five years, and once the MOP is met, homeowners can continue to rent out their flats even if they purchase private property, thus earning additional passive income.

Also, according to authority data, the number of resale flat buyers paying Cash Over Valuation (COV) is gradually decreasing, further lowering the barriers to purchasing resale flats. In the fourth quarter of 2023, only about 15% of buyers paid COV, a significant drop from nearly 30% in the same period of 2022.

In 2023, the Singapore government also increased the Central Provident Fund Housing Grant (CPF Housing Grant) by up to S$30,000, further supporting first-time homebuyers in purchasing resale flats.