The 2 Types of Singaporeans Who Aren’t Going To Be Too Happy With HDB’s New Income Ceiling Increase

hdb income ceiling

Have you ever tried squeezing into an MRT train at rush hour? I have. Sometimes I’m the last person in before the door closes and the relief that I’m able to make it is immense. Then, just as I start to lean against the door, hoping the train leaves the station, it opens again. And no matter how packed the carriage already is, there will always be one person who sees this as his second chance to board the train.

And so I’m squeezed even more than before. So yeah, I think I have a small idea what it feels like to be someone who is balloting for a HDB flat and hears the recent announcement by National Development Minister Khaw Boon Wan.

Now, we’re not saying this is a bad move…

I know of at least one couple who is very happy with Mr Khaw. His announcement that the income ceilings for Build-To-Order flats and Executive Condominiums will be raised later this year resulted in their pretty honest response – “YAY!!! Thank you.” Of course, I don’t know their exact combined income, but I think it’s pretty safe to assume that it’s just above the current $10,000 income ceiling for Build-To-Order flats.

In fact, I’m very confident they’re not the only people I know who are ecstatic about this announcement. I imagine most of my peers, especially those that are only getting married now, are excited to know that they’ll soon be eligible to apply for Built-To-Order flats (BTO) and Executive Confominiums (EC). Most of them would have been in the workforce for at least a decade now, and are therefore earning just above the current limit.

(UPDATE: Prime Minister Lee at this year’s National Day Rally in August announced that the income ceilings have been increased to $12,000 for HDB BTO flats and $14,000 for ECs)

I’m relieved for them. This news means that they won’t have to worry about setting aside more money to buy a condominium or a resale flat. By buying heavily subsidised housing and taking a smaller home loan, they’ll be able to set more cash aside for emergencies, insurance and investments.


… but we are saying there’ll be people who will be negatively affected.

Remember my story about the MRT carriage? That’s what it feels like for people who apply for BTO and EC flats. Macpherson Spring, an HDB BTO that was launched earlier this year, had 2,825 applicants for the 378 4-room flats on offer. That’s almost 7.5 times the number of applicants for the number of available flats. Sure, that’s an extremely above average number due to the convenient location, but on average the subscription rate for HDB BTO flats is still about 1.5 to 2 times.

Which means there will be a sizeable amount of people negatively affected by this new influx of eligible applicants. Here are the 2 broad categories of Singaporeans who will be affected by this new rise in income ceiling:


1. Those who have no other options but to apply for an HDB BTO

Households with an average income around $12,000 already have the options of a new EC, a resale flat, a condo or a private property. Now, they’ll have the option for an HDB BTO as well! On the other hand, households with an average income of $5,000 or less have a different set of options – either a 2-room, a 3-room or a 4-room flat. No matter what they choose, they’re still at the mercy of HDB’s balloting system. Because of their lower incomes, resale flats and private properties are often either out of their reach or would definitely affect their cashflow because of the higher monthly mortgage payments.

Because they’re at the mercy of HDB’s balloting system, they’re not going to be too pleased with being forced to compete with even more applicants once the income ceiling gets raised later this year. It’s just like not being able to afford a car and being forced to squeeze in an MRT carriage every day with people who can actually afford to cab, or own cars, or live near their workplaces.


2. Those who have been balloting for HDB BTOs multiple times

HDB has several priority schemes that give you higher chances of getting a small queue number when balloting. For example, married couples with children or couples who live with or near their parents have a higher chance of getting a flat compared to those that don’t. But as anyone who’s unsuccessfully balloted for a HDB BTO flat knows (and I’m not talking about those who are invited to select a flat and choose not to book), having more chances still doesn’t guarantee that’ll you get a flat.

What’s more, even if you do qualify for one of the several priority schemes, you now have to compete with an influx of new applicants – many of whom will also qualify for one of these priority schemes! Which means your chances of getting a flat still remains low.


A friendly suggestion to HDB now that the income ceiling has been raised

We know there’ll probably be no change in the methods used to give those with unsuccessful ballots a better chance at a higher queue number. Perhaps with the increase in competition for HDB flats, this should be something to take into consideration as well.

However, there should definitely be changes implemented to give priority to those with lower household incomes. Currently there is no such priority scheme, which is rather odd, considering that HDB flats are subsidised housing intentionally built for those with lower household incomes.

Providing subsidies might help with the affordability of the flat, but that assumes that they can get the flat in the first place. With the new influx of applicants with higher incomes that have several housing options, HDB should definitely ensure that families with lower household income are not left behind.


What other policies should HDB implement to avoid penalising others with the new income ceiling? We want to hear from you.

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