Housing policy changes announced at the National Day Rally speech: Singapore’s Prime Minister, Mr. Lee Hsien Loong,announced four housing policy related changes in his National Day Rally speech. The changes are: 1) income ceiling for HDB flatswill be raised from SGD10,000 to SGD12,000, while that for Executive Condominiums (ECs) will be raised from SGD12,000 toSGD14,000; 2) income ceiling for Special CPF Housing Grant (SHG) will be raised from SGD6,500 to SGD8,000 to cover morehouseholds and the grant’s current maximum amount of SGD20,000 will be doubled to SGD40,000; 3) “Fresh Start HousingScheme” will be implemented to help second time rental households own a 2-room HDB flat (these flats will have shorter leases andstricter resale conditions); and 4) “Proximity Housing Grant” will be introduced to help young couples looking to buy a resale flatwith or near their parents or parents looking to live near their married children (the details on this are yet to be announced).

　　The income ceilings for HDB and EC were largely expected and may have limited impact on the private market, in ourview: The changes to the income ceilings for HDB and EC were largely expected as National Development Minister Khaw BoonWan had earlier hinted at this in June 2015 noting that incomes have gone up since the last time the ceiling was raised in 2011. ForECs, we also note that the income ceiling criteria combined with down payment requirements and Mortgage Servicing Ratio (MSR)restrictions would suggest that few households would be able to meet all criteria and requirements at current price levels. We expectthe changes to the income ceiling to only have a marginal impact on private residential, as the proportion of ECs (which competemore with private residential) in the more recent government land sales programmes have been relatively small.

　　Going ahead, we expect some rationalisation of in-place policy measures: With oncoming supply amidst softer demand as wellas the prospect of higher interest rates, we expect some rationalisation of in-place policy measures for the private market. Prior theimposition of the Total Debt Servicing Framework (TDSR), the government had put in place several measures including lowerLTV, sellers’ stamp duties, additional buyers’ stamp duties to name a few. With the TDSR in place, we think it may be worthwhileto relook at the entire suite of measures to determine if all of them remain relevant or if some rationalisation can be undertaken.