What the end of the HDB wait-out rule means for private homeowners | Money Talks

Government Removes 15-Month Wait-Out Period [0:09]

• The 15-month wait-out period for private homeowners wishing to purchase a non-subsidized HDB resale flat has been removed.
• This policy was implemented in 2022 to temper the rising prices in the HDB resale market.
• The government believes the measure has served its purpose, with HDB prices declining for two consecutive quarters.

  "Well, that's not going to be an issue anymore because the government has just removed it."

Rationale Behind the Policy's Introduction [1:21]

• The 15-month wait-out period was introduced because HDB resale flat prices increased by 12.7% in 2021 and 10.4% in 2022.
• This surge was attributed to increased demand post-COVID, with many seeking larger spaces for work-from-home arrangements.
• Private property owners, having seen their own property values appreciate, had the financial capacity to drive up HDB resale prices.

  "And the property prices went up by 12.7% in 2021. And in 2022, it was still in a very positive upwards and it went up by 10.4%."

Impact of the Wait-Out Period and Current Market Conditions [3:21]

• The 15-month wait-out period helped to moderate HDB price growth, bringing it down to 4.9% in the following year.
• However, recent quarters have shown zero or negative growth in HDB prices, prompting the government to reconsider the policy.
• The goal is a balanced approach where prices do not experience extreme double-digit growth or decline.

  "But we also realize the last three quarters, public housing, the last quarter of last year, because it is not only these two quarters that was negative."

Multiple Factors Moderating HDB Prices [4:46]

• The removal of the wait-out period was not the sole factor in the price moderation of HDB resale flats.
• Increased supply through Build-To-Order (BTO) flats and enhanced grants for first-time buyers also played a significant role.
• These combined efforts led to a more sustainable HDB price increase of 2.9% last year.

  "So the supply was keeping up? Supply was keeping up."

Estimated Impact on Market Entry [6:19]

• While exact numbers are unavailable, an estimated 1,800 appeals were made annually against the wait-out period.
• Approximately 25% of these appeals were granted, suggesting a significant number of rejections.
• The actual number of private homeowners potentially entering the HDB resale market could be around 5,000, considering those who did not appeal.

  "And they also highlighted about 25% of the appeal were granted on case to case basis, which means to say out of the 1,800, 25% is 450 cross through."

Expected Market Reaction Post-Removal [7:45]

• A sudden surge in HDB resale prices is not expected due to current market conditions, including longer selling times for HDB flats.
• Demand for HDB resale flats has decreased, with approximately 5,000 fewer units sold annually compared to the post-COVID period.
• Private homeowners right-sizing may opt for units with shorter leases, freeing up cash for retirement, and are willing to pay a premium for location or specific features.

  "So there has been a drop in demand. That's why people are taking it more difficult to sell the property."

Broader Market Implications and Remaining Measures [11:31]

• The removal of the wait-out period is expected to increase mobility within the property market, potentially leading to more private resale listings and moderating private property prices.
• Other cooling measures, such as the 30-month wait-out for subsidized housing, Additional Buyer's Stamp Duty (ABSD), and Total Debt Servicing Ratio (TDSR), remain in effect.
• The government's approach is a calibrated adjustment to support a specific demographic without causing market instability.

  "So it is an entire ecosystem that will start triggering some movement."