Budget 2023 Singapore: Increased BSD Rates, More CPF Housing Grants, and More

Budget 2023 Singapore: Increased BSD Rates, More CPF Housing Grants, and More
Budget 2023 Singapore: Increased BSD Rates, More CPF Housing Grants, and More

The Budget 2023 statement was announced by Deputy Prime Minister and Finance Minister Lawrence Wong on 14 February 2023. Here’s a summary of the various property-related announcements.

Budget 2023 Singapore announcements Changes announced
More CPF Housing Grant for first-timers buying HDB resale flats For eligible families
4-room or smaller: Previously, up to $50,000; now up to $80,000
5-room or larger: Previously, up to $40,000; now up to $50,000

For eligible singles
4-room or smaller: Previously, up to $25,000; now up to $40,000
5-room or larger: Previously, up to $20,000; now up to $25,000

Additional BTO ballot for selected first-timer applicants First-timer families with kids and couples under 40 years old will get an additional BTO ballot
Increase in Buyer’s Stamp Duty (BSD) tax  Previously, up to 4%; now, up to 6% and 5% for residential and non-residential properties, respectively
CPF monthly salary ceiling to be raised Adjusted incrementally from $6,000 to $8,000 by 2026
Increase climate-related spending in the medium term More green buildings and vehicles

Other highlights include more cash payments and vouchers to cushion the impact of inflation felt by households, increased measures to support parenthood, better income protection for platform workers, and higher taxes on luxury cars and tobacco.

Budget 2023: More CPF Housing Grant for First-timers Buying HDB Resale Flats

If you’re trying to buy a home with your partner and don’t want to wait for a BTO flat, chances are you’re probably looking at a resale HDB flat – and so is everyone else. The COVID-19 pandemic saw BTO construction delays. In turn, longer BTO completion times were observed, pushing young families who have urgent housing needs (or were unwilling to wait) into the resale market.  

Currently, HDB resale flat prices are at a record high and concerns around housing affordability have been a hot topic. 

Recognising this, the CPF Housing Grant amount for eligible first-timer families has been increased. Those buying 2- to 4-room HDB resale flats will get $30,000 more, while those purchasing 5-room or larger flats will get an additional $10,000. 

Aside from meeting the existing CPF Housing Grant eligibility criteria, these first-timer applicants must not have received any housing subsidies before. The additional grant amount will be credited into the CPF accounts of these eligible buyers from April 2023.

Revised CPF Housing Grant for First-timer Families Buying Resale HDB Flats

HDB resale flat size Previous CPF Housing Grant amount Revised CPF Housing Grant amount
4-room or smaller flat Up to $50,000 Up to $80,000
5-room or larger flat Up to $40,000 Up to $50,000

Revised CPF Housing Grant for First-timer Singles Buying Resale HDB Flats

HDB resale flat size Previous CPF Housing Grant amount Revised CPF Housing Grant amount
4-room or smaller flat Up to $25,000 Up to $40,000
5-room or larger flat Up to $20,000 Up to $25,000

How Will the Budget 2023 Announcements Affect HDB Resale Flat Prices?

Having more financial assistance in the form of housing grants will give first-timer buyers bigger financial muscle when buying resale flats. Considering the Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR) in place, this means they can increase their homebuying budgets. Aside from having greater access to purchasing a resale flat, they will also have more options for the type of HDB resale flats they can obtain. 

According to Dr Tan Tee Khoon, Country Manager – Singapore, PropertyGuru, demand is expected to be bolstered by this move and propped up by these first-time buyers, especially for 4-room and smaller flats. 

“The introduction of higher housing grants for first-time HDB resale flat buyers will likely stabilise the real estate market and shield it from hard landings. As a result, the HDB resale flat prices are likely to be supported in the immediate term.”

Paul Wee, Vice President – PropertyGuru Finance, highlights the increased CPF Housing Grant amount will also reduce loan amounts and provide “some financial relief for those who can only finance their property via loans from financial institutions”.

Budget 2023: Additional BTO Ballot for Selected First-timer Applicants

For those who have done a ‘BTO proposal’ and have been applying for a BTO flat with your partner, you’ll have first-hand experience with how competitive it is to secure a ballot number. BTO application rates are high and getting a queue number has become much tougher. 

In the Budget 2023 statement, it was announced that an additional BTO ballot will be given to first-timer families with kids and couples under 40 years old buying their first home. The move will be implemented later this year. 

So, if you’re intending to ballot for an upcoming BTO launch, this is great news!

Budget 2023: Increase in BSD Rates

Effective 15 February 2023, the BSD rates will be increased. For residential and non-residential properties, it will be adjusted up to 6% and 5%, respectively. Properties valued above $1.5 million will be affected, which comprise an estimated 15% of residential properties and 60% of non-residential properties in Singapore.

Here’s a nifty infographic to illustrate this change.

The Budget 2023 property tax announcement is expected to raise Singapore’s property tax revenue by $500 million per year.

According to Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group, this adjustment will likely be most keenly felt by those buying higher-priced, luxury properties. Still, well-heeled buyers may proceed with their purchases, given the appeal of Singapore properties as a safe haven to park wealth in.

“The adjusted BSD taxes will likely cause some knee-jerk reactions to private property purchases as buyers re-calibrate their positions. Sales in the coming months are also likely to moderate as buyers reframe their expectations. However, the impact of the BSD adjustment may not be significant in the long term as the extra amount for a $2 million property is small.”

Budget 2023: CPF Monthly Salary Ceiling Raised to $8,000 by 2026

Currently, the CPF monthly salary ceiling is at $6,000. But by 2026, this cap will be adjusted in incremental steps to $8,000. In the Budget 2023 announcement, this was explained to have been implemented to ensure the CPF monthly salary ceiling “keeps pace with rising salaries and helps middle-income Singaporeans save more for their retirement”.

CPF Monthly Salary Ceiling Changes by 2026: Budget 2023 Announcement

Time period CPF monthly salary ceiling
Currently (as at 14 February 2023) $6,000
From 1 September 2023 $6,300
From 1 January 2024 $6,800
From 1 January 2025 $7,400
From 1 January 2026 $8,000

For many Singaporeans, using their CPF Ordinary Account (OA) monies is a preferred way to pay off their mortgage. So, this revision may be welcome news to some as more can potentially be used for their monthly repayments.

Still, Paul Wee, Vice President – PropertyGuru Finance points out that when it comes to financing property purchases, this CPF monthly salary ceiling revision may not have a significant impact on how people service their monthly instalments.

Additionally, it is prudent to note: when your CPF usage increases, the accrued interest required to be refunded into your CPF OA upon the disposal of your property will also increase.

Budget 2023 Singapore: Increased Climate-related Spending

In line with the Singapore Green Plan 2030, we’re already seeing more Electronic Vehicle (EV)-ready towns, parks being built and enhanced, cycling paths, solar panels installed to reduce energy consumption in HDB estates… the list goes on!

The commitment to a green future was reiterated during the Budget 2023 statement when it was announced that the government would increase climate-related spending in the medium term. This is so a greater amount of resources is available for the government to progressively implement its extensive infrastructure plans and other measures under its ‘net-zero by 2050’ ambition.

We can expect more buildings to be greened and a greater emphasis on infrastructure to support the adoption of green vehicles.

For more property news, content and resources, check out PropertyGuru’s guides section.

Looking for a new home? Head to PropertyGuru to browse the top properties for sale in Singapore.

Need help financing your latest property purchase? Let the mortgage experts at PropertyGuru Finance help you find the best deals.

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