Simons Trading Research

Author: simonsg   |   Latest post: Wed, 15 Jan 2020, 5:25 PM


Real Estate - New Rules on Buying Homes Using CPF & HDB Housing Loans

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  • New rules on buying homes using Central Provident Fund (CPF) or Housing Development Board (HDB) housing loans will be introduced, focusing on whether the lease of the property can cover the buyer until at least age 95. This was announced by the Ministry of National Development (MND) and Ministry of Manpower (MOM).
  • Under the current rules, the amount of CPF allowed to be used is dependent on the remaining lease of the property. For instance, if there is at least 60 years left in the lease, a buyer can use the maximum CPF allowed to pay for the property. If the property has < 60 years left on its lease, a buyer is eligible to use CPF if his age plus the remaining lease is at least 80 years.
  • With the changes, the total amount of CPF that can be used will depend on whether the remaining lease can cover the youngest buyer until age 95. If this criteria is met, for instance, a buyer can use CPF to pay for a property up to its valuation limit. If not, the use of CPF will be pro-rated.
  • No CPF can be used if the remaining lease is less than 20 years. This has been lowered from 30 years.
  • For those looking to take an HDB housing loan, buyers will be eligible to take the full 90% loan-to-value limit if the remaining lease can cover the youngest buyer to the age of 95. This is even if the flat has less than 60 years left on its lease. If the remaining lease cannot cover the buyer until age 95, they will be offered a loan on a pro-rated basis.
  • The changes take effect on 10 May 2019.


  • The move is not expected to have a wider market impact as 99% of private property families and 98% of HDB households currently have a home that should last to age 95 years and older, according to MND.
  • Key rationale behind implementing the rule is to take into account the changing needs and higher life expectancy of Singaporeans, and to have a home that will cover their lifetime.
  • The move may cause a slight shift in preference of young couples to new launches and recently completed projects to maximise the utilisation of the CPF funds. At the same time buyer pool for flats below 60 years is also expected to widen providing more liquidity.

Maintain NEUTRAL

  • Maintain NEUTRAL on the sector as the market remains impacted due to the effect of cooling measures and high supply in the pipeline. We expect property prices to see a modest 0-2% growth in 2019.
  • APAC REALTY LIMITED (SGX:CLN) is our sector pick as we expect volumes to stay resilient. (BUY, Target Price: SGD0.72). (APAC Realty is also one of the RHB 20 Jewels 2019 Edition - Top Singapore Small Cap Companies.)

Source: RHB Invest Research - 10 May 2019

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Labels: APAC Realty

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