The enhanced CPF Housing Grant, which will see eligible first-timer families get up to S$120,000, up from the current S$80,000 limit, will benefit lower-income groups the most, they added.

File photo of Sengkang GRC HDB flats (Photo: CNA/Javier Lim)

SINGAPORE: The tightening of Housing and Development Board (HDB) loan limits may slow down demand in the short term but it will have a limited impact on prices in the long run, according to property analysts CNA spoke to on Tuesday (Aug 20).

HDB and the Ministry of National Development (MND) announced late on Monday that the loan-to-value (LTV) limit for HDB loans will be lowered from 80 per cent to 75 per cent, reducing the maximum amount that home buyers can borrow from HDB.

This is the fourth set of property cooling measures since December 2021 when the LTV for HDB loans was lowered from 90 per cent to 85 per cent. It was further cut to 80 per cent in September 2022.

Mr Lee Sze Teck, senior director of data analytics at Huttons, said the resale demand may slow temporarily in the near term as buyers take stock of the new measures.

Mr Lee added that an estimated 7,000 flats will reach their minimum occupation period (MOP) next year - lower than this year's estimated 12,000 flats. As such, he said HDB resale prices may continue to rise next year.

There is also a "possibility" that there may be more gains in the prices of two-room and three-room resale flats, according to Mr Lee.

For four-room and larger flats, he said most buyers do not see an increase in grants and utilise a bank loan for their purchase, hence the latest cooling measures are of "no difference to them".

But because of the lower supply of 4-room and 5-room flats that are on the open market after hitting the minimum occupation period (MOP), the prices are likely to continue to increase.

His sentiments were echoed by Mr Nicholas Mak, chief research officer at property technology portal Mogul. sg, who agreed that the measures will have a limited impact on the market.

"It will probably slow down the rising prices of HDB flats but... this measure cannot be used alone, it has to be used in conjunction with... a steady, strong supply of Build-to-Order (BTO) flats because this measure only addresses the demand side of the equation, it does not address supply side," said Mr Mak.

He added that the tightening of loan limits will impact those who are currently stretched financially.

"This group will try to max out their loan-to-value ratio, their total debt servicing ratio... to buy the HDB flat," he said.