Singapore tightened the country’s public housing policy by reducing tenures for new loans and restricting foreign permanent residents from buying government-built homes.
Singapore will cut the maximum tenure for new housing loans to purchase homes built by the state to 25 years from 30 years, the Housing & Development Board (HDB) said in a statement. Borrowers will receive as much as 30 percent of their gross monthly income, down from 35 percent, it said.
With 82 percent of Singaporeans living in government-built apartments, housing policy has been used to encourage the development of families.
Grants are given to married couples buying their first homes, with additional funds for those living close to their parents, according to HDB’s Web site.
“We are introducing two measures to further stabilize the HDB resale market,” the board said in the statement. “These measures are in line with those introduced by the Monetary Authority of Singapore to encourage financial prudence among borrowers, which is especially important given the current low interest rate environment is unlikely to be sustained.”
Foreigners will be allowed to buy resold HDB flats three years after they obtain permanent residential status in the city-state, the board said.
The measure took effect 5:30pm on Tuesday.
Singapore’s public housing policies also affect private developers because they rely on these homeowners to upgrade to condominiums. The city’s private home sales last month slid to the lowest since December 2009 as investors balked at new curbs on property loans and developers marketed fewer projects.
Home sales fell to 481 units last month, 73 percent lower from a month earlier, according to data from the Urban Redevelopment Authority on Aug. 15.
Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a four-year campaign in January to curb speculation in Asia’s second-most expensive housing market.
Singapore in June also unveiled new rules governing how financial institutions grant property loans to individuals, extending the efforts.