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5 Jan

Resale HDB flat prices slow in rising

Property analysts are expecting HDB flat prices to correct itself within this year. Though stricter property rules and private home prices may affect the HDB resale flat market, prices are still expected to rise, though at a slower pace. How much more can it go before reaching its full glory?

Prices of resale Housing Board (HDB) flats are still rising, but the pace of this increase finally moderated in the final quarter of last year. Estimates released by the HDB yesterday showed resale flat prices rising 1.7 per cent in the three months to Dec 31 – about half the 3.8 per cent rise seen in the third quarter. The growth in resale flat prices had similarly eased at the start of last year, rising 1.6 per cent in the first quarter. But a strong economy and hot demand for homes continued to boost flat values. Prices rose 3.1 per cent in the second quarter, and a further 3.8 per cent in the third, before ending the year 10.7 per cent higher than prices in the fourth quarter of 2010.

All eyes will be on the HDB resale market this year as the property cooling measures take effect.

This year, however, analysts are less optimistic about the strength of resale flat prices, with some predicting that they will further moderate and could even begin correcting. Two key factors are at play here. First, the global economic outlook is far more uncertain this year compared to the last and a downturn could spell a correction in home prices, say analysts. Second, the Government has introduced a series of measures to cool the market in the past two years. These have restricted home ownership and tightened financing. The latest rules, which impose heavy tax duties on private residential homes, are likely to have a ‘trickle-down’ effect on the public housing market.

Property firm PropNex chief executive Mohamed Ismail said the numbers from this quarter mark a turning point for the public housing market. ‘Price stabilisation will set in and possibly even a price correction of not more than 3 per cent (could happen) in the HDB resale market,’ he added. ERA Realty’s key executive officer Eugene Lim said the moderation in price rises was also due to the HDB’s aggressive supply of new homes and, to some extent, the policy shift by the HDB to raise the income ceiling for new flats.

The global economy may affect the property markets in Asia. How will Singapore's market react to changes?

It offered a record 28,043 flats for sale last year to address the strong demand for homes. These comprised 25,196 new flats under its Build-To-Order (BTO) scheme and 2,847 balance flats under its Sale of Balance Flats exercise. And in August, HDB raised the monthly income ceiling from $8,000 to $10,000 for BTO flats, and from $10,000 to $12,000 for executive condominiums. ‘More first-time buyers would have moved from the resale market to the new flat market,’ noted Mr Lim. The HDB said yesterday that since it raised the income ceiling, about 8 per cent – or 2,991 applicants – who participated in its two recent sales launches were in the income bracket of $8,000 to $10,000.

Meanwhile, property agencies say the cash premiums paid to the seller for HDB resale flats above a flat’s valuation, known as cash-over-valuation (COV), have been decreasing. PropNex reported a dip of about $5,000 in median COV for the month of December, to a range of about $25,000 to $45,000 across all flat types. ERA Realty said median COV based on its transactions had stabilised at about $30,000 to $40,000 in the fourth quarter on average with no further rises, similar to levels seen in the third quarter. ‘COVs are likely to remain soft, and could dip $10,000 to $15,000 in the coming six to nine months,’ said Mr Ismail.

More BTO flats will be built in mature HDB estates this year. Image by the Singapore Tourism Board.

Meanwhile, the HDB will continue to ramp up the supply of homes. It said yesterday that buyers will be offered another 25,000 new flats this year, spread across the island. This month, 3,890 BTO flats in Choa Chu Kang, Punggol, Sengkang and Tampines will be launched for sale. Detailed public housing data for the fourth quarter will be released on Jan 27.

Mr Tan Kok Keong, head of research at property firm OrangeTee, said that looking ahead, ‘the more challenging economic outlook would play a part in people’s willingness to pay increasing prices for resale HDB flats’. Although recent cooling measures were primarily targeted at the private residential market, as prices start to decline, ‘you can expect public housing to exhibit similar trends’, he added.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission

Editor’s Commentary:
The COV and private home prices may be some of the most crucial factors influencing the HDB resale flat market. Would prices of resale flats, in HDB estates where new HDB flats are being built, be affected by the latter?

25 Nov

Results and thinking: which should come first?

A recent conversation I had gave me insight into how, as Singaporeans, we place too much emphasis on past results, and that our way of thinking is shaped by these results and other experiences observed.

Innovative thinking is needed to solve Singapore's housing problems. (Image courtesy of ThinkStock.)

Innovative thinking is needed to solve Singapore's housing problems. (Image courtesy of ThinkStock.)

Too much emphasis is placed on funding performance history. Yes, it is useful for us to measure current housing performances against past performances, such as keeping tabs on the house prices. But relying on old methods to solve new problems can only take Singapore so far.

Like other problems that Singapore faces, issues in the housing market are dealt with using a heavy reliance on technical analysis, like comparing past and present rates of Build-To-Order (BTO) housing over-subscription, price hikes (and drops) and so on.

To effectively resolve our housing needs, our thinking and funding should not be entirely based on performance history and past results. Rather, creative thinking and efficient execution of policies should directly lead to positive results.

I believe this is partly the reason Singapore’s government housing policies have been stuck in a virtual limbo. Back when Singapore was struggling towards independence and naysayers doubted the country’s ability, it was then Prime Minister and current Minister Mentor Lee Kuan Yew’s vision to model Singapore after successful countries that made the country what it is today in just three decades.

Today, however, things are much different. Singapore is now one of the most successful Southeast Asian nations. The problem of rising housing costs we face now is a completely different set of problems that requires new approaches to solve. We cannot afford to be rehashing the same solutions in a situation that calls for innovative thinking.

National Development Minister Khaw Boon Wan’s solution of releasing a bumper supply of BTO flats is one way of quickly dissipating demand; but in the future, when there is no more land to release, even more creative thinking will be needed to fulfil housing demands. Policy makers have already begun exploring the construction of homes skywards and seawards, so what about doing so downwards for instance?

If Singaporeans and their government are looking to make a change, why not take a leaf from companies with exceptional visions? One such company is Apple, which did not start out in the mobile phone industry. While it took established mobile phone giants like Nokia and Motorola 10 years and hundreds of models and features to get to where they currently are, Apple accomplished similar achievements in half the time and with only one phone model.

If we encourage a culture of innovative thinking to solve not just Singapore’s housing problems, but other issues in transport and healthcare as well, we will certainly get positive results.

4 Oct

Resale HDB flats rise in price

As the private non-landed residential market takes a backseat, resale HDB flats are leaping forward in terms of rising prices. Despite HDB’s announcements and applications for new BTO and sale of balance flats exercises, this property market does not seem to be waning yet. Why is that? And when will the prices recede, if ever?

Prices of resale HDB flats continued to increase in the past three months but National Development Minister Khaw Boon Wan said efforts to ramp up supply of new flats should help stablise prices soon. The Housing Board’s (HDB’s) flash estimate of the third-quarter resale price index is 187.1 – or 3.8 per cent higher than the previous quarter.

Despite launches of BTO and SBF flats, resale HDB flat prices continue to rise. Seen here is the Golden Peony BTO flat in Jurong West. Image courtesy of HDB.

Mr Khaw, in his latest blog post, said HDB is ‘making good progress’ in meeting the needs of first-time applicants who are newly-weds. Last month , for example, HDB put up for sale 8,200 build-to-order (BTO) and sale of balance flats (SBF) – including units in mature estates such as Bukit Merah and Clementi – to cool the demand for resale flats. The balance flats were wildly popular, with some in mature estates seeing 50 times as many buyers as there were units available, while the BTO exercise registered an average application rate of 1.7 times.

HDB flats in mature estates such as Bukit Merah will see 'new' neighbours soon with building of new BTO flats.

Mr Khaw expects half the 15,500 first-time applicants to get flats. ‘This September launch has redressed part of the shortage in public housing. Our efforts in ramping up HDB flat supply will help stabilise the market. We are beginning to see some light at the end of the BTO tunnel,’ he wrote.

Experts said the continued buoyancy in resale-flat prices is a sign that homeowners are now more reluctant to put their units up for sale. ERA Realty key executive officer Eugene Lim said property owners in general have become more cautious about selling their homes and getting another, after the Government lowered the loan-to-value limit to 60 per cent for those with existing property loans. He added that cash-over-valuations (COVs) continue to boost resale-flat prices. COVs are cash premiums paid above the official value for resale flats. Industry experts estimated that the COV was between $35,000 and $37,000 in the last quarter. Mr Lim said the market may continue in this fashion unless there are policy changes that can increase the supply of resale flats for sale.

 

Loft @ Nathan, one of the new property launches available to buyers.

PropNex chief Mohamed Ismail predicts that resale-flat prices will have climbed by as much as 11 per cent by the end of the year. ‘In spite of this, we are expecting prices to stabilise with the introduction of more new BTO and SBF flats,’ he said.

Mr Nicholas Mak, research head of property consultancy SLP International, estimates that resale-flat prices will have increased by up to 14 per cent by year’s end, as it will take time for the effect of HDB’s large BTO launches to be felt. Mr Lim noted that new flats may not appeal to all first-time buyers , due to the waiting time of at least 21/2 years for the units to be completed.

Private-property prices, however, are showing signs of moderation. The Urban Redevelopment Authority’s private residential property index rose 1.3 per cent in the past three months, compared to 2 per cent in the previous quarter. Non-landed properties in Outside Central Region areas chalked up the highest price increase of 2.1 per cent. Those in the Core Central Region and Rest of Central Region had 0.8 per cent and 1.1 per cent rises respectively. The Core Central Region includes prime areas like Orchard Road and Newton. The Rest of the Central area includes Outram and Rochor. PropNex’s Mr Ismail said the strong showing by properties outside the central regions is due to recent launches of mass-market condominiums in those areas.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
New BTO flats are coming up in not only in the newer HDB towns, but also in older mature estates. As they are yet to be built or occupied, it will be interesting to see if their presence affect resale HDB flat prices two to five years down the road. Although, the factors affecting this may be manifold. Which way do you think the market will turn?

10 Sep

Does the higher HDB income ceiling help you?

HDB announced that the income ceiling for new BTO flats and ECs have been raised to $10,000 and $12,000 respectively. Has this made buying a new home more likely? Or is it still very much out of reach? Listen to the frustrations of one family.

My wife and I were delighted when Prime Minister Lee Hsien Loong announced that the income ceiling would be raised to $10,000 and $12,000 for new build-to-order (BTO) flats and executive condominiums (ECs) respectively. We checked the HDB website several days later but discovered that we were once again ineligible to apply for ECs even though our combined income falls below $12,000. That is because of a clause stating that an applicant cannot own any private property 30 months prior to EC application.

One of the latest Executive Condominium offerings by HDB - Arc at Tampines

We are prepared to sell our private property to apply for an EC. However, requiring us to sell it 30 months before applying for an EC does not make sense. Where will we stay for 21/2 years? In fact, if one includes the time taken for construction of the EC, we would have to spend at least five years renting a place or living with our parents.

We have a toddler and plan on having another child. The waiting period will surely disrupt their education and childcare. Two years ago, we did not qualify because our combined income exceeded $8,000. With sellers seeking cash-over- valuations of between $60,000 and $90,000 in our preferred location – near both our parents’ homes – we were forced to buy a small private condominium apartment that was selling at valuation as we did not have enough cash.

The inescapable irony was that we qualified for a bank loan to buy a private property but did not have enough cash to buy a subsidised public flat. Being forced to buy a private home saddled us with a whopping $600,000 loan. We are toying with the idea of selling our private property as our joint income is just below the income ceiling for now, but we are uncertain if we will still be earning the same income 30 months from now.

Prices of private condos are about double that of HDB flats, even resale ones, which may already be priced higher than new BTO flats.

All we want is to live in a home we can afford and, yet, we are caught in a predicament. We think this could be our last chance to buy a Housing Board flat. We hope the Government would consider revising this rule for the sandwiched class.

~ Lim Chong Wee

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Low home loan interest rates and more HDB flats, but for some (or perhaps a good many more), owning their own home is still not feasible. There may not ever be a complete solution to housing the rising population in this tiny city state, but at least the low-income earners, singles and the elderly have been noticed. However, what can be done for the sandwiched class?

24 Jul

Lowdown on Singapore’s property market Q2 2011

The Urban Redevelopment Authority has released their Q2 real estate statistics. 2 major property agencies, CB Richard Ellis and PropNex, have responded with their views. What do the property veterans have to say?

URA's real estate statistics are available on their website.

In their second quarter real estate statistics released yesterday, the URA has pointed out that:

Prices and Rentals
- The rate of price increases continues to moderate. Prices of private residential properties increased by 2.0% in 2nd Quarter 2011, lower than the 2.2% increase in the previous quarter.
- Prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) increased at a more moderated pace.
- Rentals of private residential properties4 increased by 1.3% in 2nd Quarter 2011, compared with the 1.2% increase in the previous quarter.

Supply in the Pipeline
- The supply of residential units in the pipeline continues to build up. As at the end of 2nd Quarter 2011, there was a total supply of 71,111 uncompleted private residential units from projects in the pipeline.
- Of the supply in the pipeline, 33,899 units remained unsold as at 2Q2011.
- The unsold units comprised 10,309 units in CCR, 7,610 units in RCR and 15,980 units in OCR.

Launches and Take-up
- A total of 4,802 uncompleted private residential units were launched for sale by developers in 2nd Quarter 2011, compared with 4,130 units in 1st Quarter 2011.
- At the same time, 4,325 uncompleted private residential units were sold by developers, compared with 3,430 units in 1st Quarter 2011. Developers also sold 119 completed private residential units in 2nd Quarter 2011.

Terrasse, one of the major projects in the Outside Central Region (OCR) which sold well in Q2.

How active have home buyers been?
In response to URA’s numbers, Mr Li Hiaw Ho, Executive Director, CB Richard Ellis has this to say, “The volumes of new and resale homes (excluding ECs) sold in Q2 2011 outnumbered the corresponding numbers in the first quarter by 23.6% and 12.0% respectively.

A total of 4,444 new homes were sold in Q2 2011, most of which were located in Outside Central Region (OCR) as developers actively pushed out their projects built on leasehold sites bought from the government land sales programme in 2010.”

Hedges Park in Flora Drive.

Of the 4,444 units sold in Q2 2011, 61.4% were located in OCR. Major projects in OCR that sold well include Eight Courtyards, Hedges Park and Terrasse. Small-format projects in Geylang area seemed to be popular as seen in the sell-out of Centra Heights, Melosa and Sims Edge. In the EC market, all the 315 units of Belysa were sold during the quarter as it was attractively priced at $670 psf.

Melosa condo project in Geylang

The strong activity in the primary market spilled over to the secondary market resulting in 3,945 resale homes and 670 sub-sales in Q2 2011. Despite the slightly higher number of sub-sales in Q2 2011, it represents only 7.4% of the total sales volume, showing that the property measures are effective in keeping speculative activity at bay.

Residential prices in Q2 2011 rose by 2.0% q-o-q according to preliminary estimates by the URA, a smaller increase than the 2.2% in the previous quarter. This shows that home prices are stabilising. Home rents moved up 1.3% q-o-q, a shade better than the 1.2% chalked up in Q1 2011. The rise in rents was led by rents in OCR in both quarters, which is possible as an increasing number of expatriates take up local packages without separate housing allowances.

Sims Edge condominium units are popular with expats.

Going forward, they expect the take-up in Q3 2011 to be lower than Q2 2011’s volume as uncertainty of the debt crisis of the European Union and the U.S. have somewhat dampened market sentiments. In addition, the record supply of public housing being released to the market as well as a possible tweaking of government policies in the coming months is likely to affect the demand of private suburban homes.

How much more will COV levels rise?
PropNex’s CEO, Mohamed Ismail, has other opinions on the property market and predicts a further rise in COV for resale HDB flats.

He says, “Those who took 1Q11 to understand the cooling measures have come back to buy on the resale market. However, there are still many owners who, due to the effects of the cooling measures—especially the lower 60% Loan-To-Value ratio and revised Minimum Occupation Periods, are reluctant to move or sell their flat, resulting in a supply crunch and driving median resale prices as well as COV levels up.”

According to data from PropNex data, which has a 25% market share in the HDB resale market, COV levels have risen.

 

Mr Ismail also noted that for the months of April, May and June—which constitutes 2Q11—PropNex data showed a 1%, 4% and 10% increase respectively in the number of HDB resale flats being transacted at COVs of $50,000 and above.“Home sellers must remain realistic about their COV demands,” pronounces Mr Ismail, “because if not, there will be resistance from the buyers.”His predictions? The overall median COV looks set to rise to $38,000 in the third quarter before plateauing in the beginning of next year.”Will the resale market be affected by the new BTO launches? HDB’s latest BTO flats launch in July 2011.

“In the latest Build-to-Order (BTO) exercise in which 3,556 flats were launched,” continues Mr Ismail, “the over subscription rate was between three to four times, which demonstrated a continued strong demand for public  housing.”

His sentiments are that some would-be upgraders are hanging on to their HDB flats because of the widening price gap between HDB resale flats and private property. As such, potential HDB upgraders could have found private property prices to be out of reach so they postponed their upgrading plans.

“In addition, those with existing home loans could be put off upgrading because of the rule that they cannot borrow more than 60% of the value of the property they want to buy,” continues Mr Ismail, “the 40% cash upfront is a substantial amount for those who are taking bank loans, which have a close to 25%, also means they would have to sell before getting another loan and have nowhere to stay in the interim.”

Source: Urban Redevelopment Authority (URA); Mr Li Hiaw Ho, Executive Director, CB Richard Ellis; PropNex.

Editor’s Commentary:
Now into the second half of 2011, 3 months after the stirring General Elections in May, the housing situation seems to be in a standstill despite HDB’s announcements that many more BTO flats are being built. The income ceiling and DBSS reviews are perhaps what the public is looking for? And what about resale HDB flat prices, will they fall when the new flats are ready?

23 Jun

Centrale 8 oversubscribed – By 2 times

Despite public outcry about the price of the most expensive DBSS flats to date, Centrale 8 has seen twice as many applicants than previous launches. What does this really signify?

The most expensive Design, Build and Sell Scheme (DBSS) flats to hit the market have been two times over-subscribed.

The 708-unit Centrale 8 project in Tampines, which raised an uproar over the $880,000 price tag for its largest units, pulled in 1,431 applications by the deadline on Tuesday.

 

Centrale 8 at Tampines. Photo by Sim Lian Group Limited.

Some industry observers expressed surprise at this performance, although they pointed out that the number of times over-subscribed is not a good indicator of how well a development eventually sells.

Centrale 8, developed by the Sim Lian Group, made the news last week with a record asking price for a DBSS flat, triggering an outcry that the price was nearly that of executive condominiums.

Sim Lian backed down on its prices to varying degrees across its flat types, hours before applications closed on Tuesday, saying that the quoted price ranges were only ‘indicative’. It then released  a ‘confirmed price range’ for the flat types, which showed a $100,000 price drop to $778,000 for the top-end units.

The application result puts Centrale 8 on par with those of more recent DBSS launches. Adora Green in Yishun drew three times as many buyers as there were flats. In 2009, The Peak in Toa Payoh drew about 2,900 applications for 1,203 units. Natura Loft in Bishan in 2008 received 600 applications for 480 flats.

Adora Green DBSS flats at Yishun. Photo by Guthrie SK Land Pte Ltd.

PropNex chief Mohamed Ismail said the two-times over-subscription looked credible, given the uproar over the price and the fact that most applications were put in before the price reduction.

But he noted Sim Lian had not given a breakdown of the number of applicants by flat type. He said: ‘It is likely that more people are hoping to buy the lower-end units within their price range.’

Referring to over-subscription being a poor indicator of how quickly the units will be snapped up, he said: ‘I will be surprised if Sim Lian gets more than 70 per cent sales for the flats. Buyers will be prudent; if they are offered a flat above their budget, they will reject it.’

But Global Property Strategic Alliance chief executive Jeffrey Hong said Sim Lian’s price cuts may well produce a much lower rejection rate, as applications had been submitted on the basis of the higher initial asking prices.

The proof of the attraction of Centrale 8 will come down the road.

As the property market heated up in 2006, the first DBSS development, Sim Lian’s 616-unit Premiere@ Tampines, for example, pulled in 5,700 applications.

Despite the hoopla, only 500 flats were sold initially, although long queues formed when the remaining units went up for sale. The five-room flats there eventually sold at $308,000 to $450,000.

Dennis Wee Group director Chris Koh said Premiere’s over-subscription rate was unlikely to be repeated: ‘The hype for DBSS flats has died down, but the application rate proves that demand for public housing remains strong, despite a high asking price.’

Accounts director Khong Kiong Seng, 48, whose letter published in The Straits Times Forum Page called on the Government to regulate DBSS flat prices, said he was surprised at the application result: ‘I thought people would have stepped back because of the high prices, or waited to see what the ministry would do first. I still think the flats too expensive, but those who applied must have good reasons for wanting to buy them anyway.’

The location clinched it for communications manager Fanni Ding, 24, and her fiance, who applied for a four-room flat over family and friends’ objections.

 

Treegrove BTO flats in Woodlands. Image courtesy of HDB.

After having applied unsuccessfully for two Build-to-Order (BTO) projects in Tampines, she was delighted that Sim Lian had lowered the asking prices.

‘Everybody told me not to do it. They said I should buy a resale flat or try my luck with another BTO launch, but I really like the location,’ she said.  ‘My parents live in Tampines too, so I want to be near them.’

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Is this a case of the typical Singaporean syndrome or are there really no other property types for comparison in the same location? Weigh your options cautiously as property investment is no small, nor inexpensive, matter.

22 Jun

Is Khaw Boon Wan the home buyers’ friend?

Are Mr. Khaw’s comments making property developers shake in their boots? Home buyers seem to be welcoming them with open arms though.

 

Minister Khaw Boon Wan's blog - Housing Matters.

National Development Minister Khaw Boon Wan’s frequent blog postings about the property market are making some developers jittery, with one even branding the comments as ‘scary’.

Property players say Mr Khaw’s online musings – which are coming at a rate of up to four updates a week – blur the line between personal opinion and official policy.

They also fear his comments have already swayed market sentiment and are turning buyers more cautious.

 

The latest DBSS offering - Central 8 at Tampines.

But others in the industry welcome a new line of communication, while home buyers seem to relish the air of candour from the ministry.

One of the minister’s most pointed blog entries was written earlier this month, when he fanned fears of more cooling measures by stating that ‘sharp property price increases cannot go on forever’.

He also sounded an alert that a hefty 53,000 new homes will be looking for buyers over the next few years.

Mr Khaw used his blog to announce last month that the construction of build-to-order Housing Board (HDB) flats would be ramped up to a record 25,000 units this year, with the pace of building expected to continue next year.

Build-to-order HDB Flat. Image courtesy of HDB.

Property agents and developers reported slower sales after Mr Khaw’s remarks, while early signs indicate that land bids have turned cautious as developers await clearer moves from the Government.

Mr Jonathan Phua, general manager of business development at developer Tee International, said the minister’s blog has cast a shadow over the market.

‘I think, from now, most developers will be more prudent in bidding for land, and we can expect to see home prices stabilising,’ he said.

A managing director of a boutique developer said the blog was ‘scary’ and ‘too fluid’, adding that the postings seemed like an unofficial press release.

He also said the blog, by hinting at more measures, had itself created a cooling effect, possibly reducing the need for additional intervention.

‘There needs to be a clear line on whether his blog is just consultative or official,’ he said on condition of anonymity. ‘It is not fair to developers and stakeholders to try to keep track. I would prefer a more consistent direction coming from the National Development Ministry instead.

 

Are Mr. Khaw's comments reflective of the Ministry's stand?

The blog’s address seems to indicate that the entries are being written in Mr Khaw’s capacity as minister, rather than merely reflecting his personal views.

Another blog issue that has developers concerned involves the review of HDB’s $8,000 monthly income ceiling for buyers of new build-to-order flats.

Mr Khaw’s blog has made the ceiling increase sound inevitable, from what was a ‘review’ previously, developers say.

However, no indication has been given on when this might happen, what the ceiling might be raised to or if the ceiling for design, build and sell scheme (DBSS) flats and executive condos will be affected. Yet, developers say, they have to figure out a way to price these uncertainties into their land tenders

 

Blossom Residences Executive Condominium at Segar Road.

Some are also uneasy about the time lag between when Mr Khaw’s thoughts are published online and an actual policy shift.

Small- to mid-sized companies that lack deep pockets are more concerned.

However, other developers are less perturbed over the blogging minister, saying the advent of social media meant the faster dissemination of information was inevitable.

Roxy-Pacific executive chairman and chief executive Teo Hong Lim said the basis of the Government’s policy – to achieve a stable market – has not changed. The blog also provides another line of communication, making Mr Khaw more accessible, he added.

Mr Teo stressed that his company has always adopted mid- to long-term planning strategies to take it beyond any possible short-term measures or changing sentiments caused by Mr Khaw’s blog.

‘There are ways that we can manage our risks. For example, we can choose to buy freehold land to differentiate ourselves from government land sales sites or buy sites in locations where HDB flats will not be built… Life goes on,’ he said.

Roxy-Pacific executive chairman and chief executive Teo Hong Lim said the basis of the Government’s policy – to achieve a stable market – has not changed. The blog also provides another line of communication, making Mr Khaw more accessible, he added.

Freehold Lincoln Suites at Novena

Mr Teo stressed that his company has always adopted mid- to long-term planning strategies to take it beyond any possible short-term measures or changing sentiments caused by Mr Khaw’s blog.

‘There are ways that we can manage our risks. For example, we can choose to buy freehold land to differentiate ourselves from government land sales sites or buy sites in locations where HDB flats will not be built… Life goes on,’ he said

Most home buyers also welcome the blog, saying its frequent updates and easy access – compared to sporadic official press releases – allow them to be more informed of possible policy shifts.

Marketing manager Leonard Chong, 28, said: ‘(Mr Khaw’s) postings seem to be more candid, which makes him more personable… His frequent updates suggest that he is tracking closely what is happening on the ground.’

Editor’s Comments:
Is the National Development minister setting a positive pace for his term with his gutsy opinions? It might be too early to tell since action speak louder than words. But we are hopeful.

20 Jun

First time HDB flat buyers could be older, higher income earners

More new flat buyers are now older and earn more. There has been suggestions to raise the income ceiling according to age. What do you think?

A clearer picture emerged yesterday about the people in the queue to buy new Housing Board (HDB) flats.

Couples who are engaged or already married and applying to buy for the first time are now older, and many hope to live near their parents.

Fresh information from HDB on the profile of buyers spurred National Development Minister Khaw Boon Wan to give the strongest hint yet that the income ceiling for those buying new flats – which has been unchanged for the last 17 years – will be raised.

 

Any luck securing a unit in the new blocks of Vista Spring BTO HDB Flats? Image courtesy of HDB.

Writing in his blog, he said there was a strong case for raising the income ceiling, given that today’s first-time applicants are older than before and likely to be earning more too.

At present, a couple’s combined monthly income must be below $8,000 to qualify for a new HDB flat.

Mr Khaw’s predecessor, Mr Mah Bow Tan, had indicated earlier this year that the next time the income cap is raised, it could be to $10,000.

Mr Khaw also noted that two in five first-time applicants wanted to live near their parents, and this underscored the need to build as many homes as possible within mature HDB estates.

In his post, entitled ‘Know Our Customers‘, he said: ‘The first rule of good customer service is to know our customers. Who are they? What are their needs?’

To this end, he had asked for the figures from HDB after overseeing his first launch of Build-to-Order (BTO) flats last month – 3,957 homes in Tampines, Pasir Ris, Punggol and Woodlands.

Woodlands Peak new BTO flats. Image courtesy of HDB.

BTO projects, HDB’s main conduit for new flats, are typically built when a certain demand level is reached. Last month’s launch of nearly 4,000 units pulled in almost 14,000 applications – making the homes 31/2 times oversubscribed.

Among the 14,000 applicants for the last BTO exercise, 14 per cent had applied for three or more previous BTO exercises in the last year.

Of these, one-third had a chance to select a flat but did not do so for reasons of their own. This means that the other two-thirds never had the chance to select a flat in repeated BTO exercises.

‘I am… conscious of the frustrations and anxiety of those who did not have a chance to select at all,’ wrote National Development Minister Khaw Boon Wan in his blog entry.I am ramping up BTO launches to try and ease this problem. ‘Meanwhile, my advice is that they try less mature estates to improve on their odds.’

It was a reflection of the sustained demand for public housing, which emerged as a hot topic in the recent general election. The unhappiness among home buyers came from either being priced out of the HDB market, or from repeated failure in balloting for a flat.

Currently, 95 per cent of flats in BTO launches are reserved for first-timers.

The numbers yesterday showed that two-thirds or 65 per cent of all applicants were first-timers; the remaining 35 per cent were buying homes for the second time.

The Ministry of National Development told The Straits Times that these proportions were similar to BTOs launched in recent months.

 

Will prices of resale flats be affected? Image courtesy of Singapore Tourism Board

Mr Khaw noted that among all first-timers, more than half had applied under HDB’s Fiance-Fiancee Scheme. The median age for this group was 27. The median age of the remaining applicants – those already married – was even higher, at 34.

‘There is therefore justification to revise the HDB income ceiling, given the rising age of applicants,’ he said.

Turning to those who have been unsuccessful in balloting for a flat, Mr Khaw noted that the situation has improved somewhat, although ‘we have much work to do still’.

In the May launch, 45 per cent of the applicants had been unsuccessful in previous attempts. In the previous quarter, the figure was 60 per cent.

Reacting to the figures, PropNex chief executive Mohamed Ismail said: ‘Home buyers who failed to get their flats will be able to see that there are many others facing a similar plight. It makes the process more transparent.’

Will Pasir Ris HDB estate see an increase in population with the launch of new HDB flats?

Dennis Wee Group director Chris Koh said the information confirmed his agency’s observation that young couples are busting the income ceiling as salaries have gone up.

If the ceiling were raised, it would make sense to also consider raising that for higher-end flats, such as executive condominiums and HDB’s Design, Build and Sell Scheme.

Key executive officer of C&H Properties Albert Lu said application numbers were likely to stay high, especially if HDB starts offering flats in mature estates.

This will certainly temper the prices of resale flats, he said.

Mr Khaw said yesterday that HDB is processing the applications and that he will analyse the profiles of successful applicants when that is complete.

‘I am sure the analysis will provide further insight,’ he said

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
As more are tying the knot later in life, a large number of new flat buyers are older and may earn more than younger first-time buyers. As the income ceiling is being reviewed, comes the realisation that this ground may been a delicate one to thread. Minister Khaw Boon Wan has his work set out for him. His decision, whatever it is, will be highly debated.

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