You are here: Home / Archives for Khaw Boon Wan

6 May

No quick-fix to managing HDB flat prices

So says National Development Minister Khaw Boon Wan.

Ever since the Government announced that new HDB flats will come at a lower price, HDB flat owners have been expressing fears of losing their nest egg should prices of flats drop. But as new flats are limited to only certain groups and limited in terms of type and location, will there necessarily be a drastic drop in resale flat prices and are we worrying too early? Though the number of resale flat transactions have decreased, prices continue to remain high. And there will always be those who wish to choose a flat of their liking in a location they prefer, as opposed to trying perhaps numerous times in the HDB ballot queue.

HDB Flats THinkStockMr Khaw reassured Singaporeans that while prices of HDB flat will only drop “a few per cent over the next few years”, but in the same breath said that the prices of HDB flats cannot keep rising forever. “If housing prices keep rising,it won’t be good. When I came into the MND (Ministry of National Development) two years ago, that was my target”. And much has been done since then, with the ramp up of BTO flat supply, changes in income ceiling, limits on HDB flat sizes, increase in number of allocated flats for both first and second-timers, and even allowing singles to buy new HDB flats.

During the recent Our Singapore Conversation (OSC) dialogue, the idea of selling back new flats only to the Housing Board was faced with much opposition. Homeowners naturally worry that their homes will lose  their value and cut them off from the profit they can earn by selling it in the open market. Mr Khaw admits that resale flat prices are difficult to manage as they are largely subjected to the market demand. SLP International executive director Nicholas Mak speculates that one way of gently letting resale HDB flat prices drop is to decrease the prices of new HDB flats in the same estate.

Forestville Executive Condominium.

Forestville Executive Condominium.

Recent debate also surround the Executive Condominium (EC) scheme\. While some have said that those who can afford an EC should not receive subsidies from the Government, the scheme was specifically initiated to help those who may not qualify for other HDB subsidy schemes. Thus should ECs still be considered a value-added profit-making asset for their owners?

30 Apr

Changes to Exec Condo housing scheme?

2013 might be the year of housing policies shockwaves. Earlier in the year, news of singles being about to purchase new HDB flats directly from housing board stirred the market a little, then there were the limits placed on dual-key apartments which are now only available to multi-generational families. A cap was also put on the size of executive condominium (EC) units, at 160 sq m. ECs have been put under the microscope of late, with some questioning the amount of subsidies buyers are receiving from the government.

Forestville Executive Condominium.

Forestville Executive Condominium.

Certain members of public have questioned whether EC buyers should receive any government subsidies at all, since they are able to or willing to afford million-dollar units in both new and resale developments. The executive condominium scheme was initially set up by the government in 1996 to help families transit between public and private properties. But as the price gap between ECs and private properties now draw close, there has been a niggling thought about whether changes should be made to this scheme.

National Development Minister Khaw Boon Wan recently highlighted that there might soon be changes in the EC scheme and buyers and developers are poised to react. Forestville, the next EC to launch in June this year, might benefit from increased response since buyers might be leaping at what may very well be their last chance to secure a unit under the current conditions. EL Development‘s Lim Yew Soon has this to say: “Whenever policies change or are alikely to, the immediate launches will have the biggest benefits. There’s a good change that buyers may snap up existing ECs to ensure they still receive the grant.” Will resale ECs also benefit from this rush?

Should there be a drastic adjustment in government subsides, the most affected might be first-time buyers. Buyers and owners of existing ECs are imploring the authorities and public to see things from their point of view. Engineer Eddy Lau, 40, said, “It’s not right to just look at the profit we make. We also pay more in interest over the years for the EC. For us who are sandwiched, ECs are the only option to upgrade.”

Ultimately, the question that probably begets the Government is, what defines “sandwiched class” and what are the housing schemes actually meant to do. And perhaps only honest answers will help everyone fully understand and accept Singapore’s future housing situation.

12 Mar

New HDB flats 30% cheaper

National MInister Khaw Boon Wan has pledged last Friday to keep prices new HDB flats 30 per cent cheaper, keeping to their promise to help Singaporeans own a home.

Their aim? To make new HDB flats affordable once again, before the property bull run which sped well ahead since 2005, to have one in a non-mature estate paid off within “four years of salary”.  Current HDB flat prices are at about “5.5 years of salary”.

HDB Flats THinkStockThe Government’s new moves and announcements are clear indications that they plan to play an active part in Singapore’s real estate situation, at least in providing “alternative housing options”. Beyond price stabilisation, Mr Khaw has said that bringing down BTO flat prices are also part of the property cooling measures.

He has also raised a series of questions pertaining to Singapore’s long term housing plans:

  1. Should Housing Board flats continue to be an appreciating asset or return to being treated simply as a social need?
  2. Should the HDB build to meet sophisticated tastes or go back to the basics?
  3. How to keep flats affordable while continuing to encourage couples to be prudent?
  4. How should public housing respond to the needs of an ageing population?
Tampines Green Forest BTO Flats. Photo by HDB.

Tampines Green Forest BTO Flats. Photo by HDB.

There is still the issue of whether these low starting prices of HDB flats will be kept around the same affordable rates or will resale HDB flats continue their flight to higher heights. This may only be revealed in 10 to 15 years’ time but how immigration and housing policies are structured may very well be the rudder that steers the ship. To troubled waters or calm ones. Those at the helm will have an important role to play. And they have to act now.

11 Mar

Singles will be allowed to buy new HDB Flats by July

This rang clear in the National Development Khaw Boon Wan’s message last Friday. And many are already cheering.

Currently singles above the age of 35 are allowed to buy HDB flats, but only from the resale market.

Currently singles above the age of 35 are allowed to buy HDB flats, but only from the resale market.

There are caveats however.

  • The age limit for singles buying flats has not changed, resale or new, you have to be 35 years of age before you can buy a public housing unit.
  • Singles can only buy 2-room flats . These flats are either 375 or 485 sq ft in size. This is just slightly smaller than some studio apartments or shoebox apartments in private condominiums.
  • There is an income cap at $5000.
2-room Bukit Batok HDB flat for sale.

2-room Bukit Batok HDB flat for sale.

A new 2-room HDB flat in Punggol went for around $100,000 last year, and that was before available grants kicked in. Currently singles can apply for a $15, 000 HDB grant if they earn $5000 or less. Mr Khaw has said that they recognise that those earning under $5000 a month will face difficulties owning a home in Singapore.

Part of the reason behind pushing out this new ruling by July this year is that the increased supply of new HDB flats have cleared “a backlog of applications from married couples seeking a Housing Board home for the first time”.

Is this new move a response to Prime MInister Lee Hsien Loong’s National Day Rally speech last year, where he acknowledged that singles have housing needs too?  Are these restrictions fair and what are the possible loopholes? Will this cause a drop of resale HDB flat prices and how will that change the landscape of this market?

30 Jan

Steep rise in Resale HDB Flat COV

The storm that brewed in the public housing market last quarter came in the form of COV prices. Rising from $45, 000 to as much as $67,800 in popular mature estates such as Toa Payoh and Tampines, January’s cooling measures may just have been the breakwater to calm the waves. The cooling measures have only just been implemented, and the first three weeks of 2013 saw steady median COVs and demand for resale HDB flats.

Mirage new HDB BTO Flats in Choa Chu Kang.

Mirage new HDB BTO Flats in Choa Chu Kang.

Whether these price waves will crash and subside or overtake the cooling measures, may be dependent on the supply of flats as well as whether there are changes in the eligibility of singles in applying for new HDB flats. Although National Development Minister Khaw Boon Wan has mentioned that this year may be the year rules change, it still awaits implementation.

The lack of supply of resale HDB flats is also partly due to the fact that most HDB owners see their flats as a good source of rental income, and as long as that option is open, and the rental demand is high, they may be unwilling to forego their HDB flats, thus decreasing the number of available resale flats in the market.

Some reasons which may have driven buyers to look for resale HDB flats:
1. They are willing to pay for a favourable location
2. They want to move into a new home quickly
3. They are looking to upgrade within the public housing category to a bigger space

On the other side of the coin, industry analysts have brought up the point that demand for resale HDB flats are driven largely by those who are ineligible to purchase new HDB flats, mainly permanent residents (PRs) and singles. Does this mean then that these groups of buyers are actually able to afford resale HDB flats and thus there may not be a need to change things around and allow them to purchase new HDB flats? Or will a change of rulings mean lesser HDB flat owners may now benefit from the rise in value of the properties over the years? Will this largely decrease the potential pool of buyers of resale HDB flats or will the demand continue to be present, perhaps minus COV (cash-over-valuation)?

28 Jan

Property prices’ sudden growth in Q4

Perhaps the property cooling measures are timely after all. What with the fourth quarter registering a sudden growth after a few months of slower movement.

Is the private property market quietening? Image courtesy of Singapore Tourism Board

Is the private property market really going to slow down? Image courtesy of Singapore Tourism Board

So in general, prices are still high, whatever dip in prices in the few months just before the end of 2012 were corrected by prices shooting up again, rounding off the year with a record-breaking run. The strong showing were in the resale HDB flat market, with a rise of 2.5 per cent and COV (cash-over-valuation) price increases, in particular for executive condominiums (ECs). The suburban private property market also saw equally strong demand, with prices up 3.8 per cent.

Developers, having paid high prices for their land bids, are not expected to drop their selling prices anytime soon, and their strong holding power will allow them to hold out till the market bounces back. Knight Frank research head Png Poh Soon is predicting a 5 to 7 per cent drop in high-end luxury home market this year, with a similar drop in mass market private homes prices.

Prices however, have considerably moderated over the years, ever since the first round of cooling measures rolled out in 2009. In the property boom of 2010, resale HDB flat prices rose a whooping 14 per cent; in 2011, prices rose 11 per cent; and in 2012, 6.6 per cent. The rise has slowed, but there is still a rise, nevertheless.

The interesting question will be, if prices are only allowed to go up, what will the property market be in like in say, 10 years? Will it be a case of what goes up must come down, or will more be priced out of property-ownership in the long run and put Singapore in the same league as major cities such as New York or Tokyo where renting is the way of life?

18 Jan

2013′s Property Heave-Ho

It looks like there is going to be some push and pull in the property industry this year. And big hoorays for that.

Heron Bay Executive Condominium in Upper Serangoon View.

Heron Bay Executive Condominium in Upper Serangoon View has a number of Dual-key units.

Push: Singles may finally have the opportunity to buy new HDB flats. National Development MInister Khaw Boon Wan said his ministry is looking into implementing this new policy within this year. Without doubt, there may be restrictions, but at the very least, there is an option where there was no room to budge before. The minimum age is unlikely to be lowered to below 35, and singles buying new flats may be able to do so only for strict ‘owner-occupier’ purpose. The fact that 3,800 of the 18,000 singles who bought resale HDB flats actually did get married eventually may have helped.

Pull:  And perhaps a number of immediate issues popped up within the last couple of months which made the authorities think twice about making rules and sticking by them. The executive condominium (EC) market for one. It has dawned on them that some buyers have been ‘taking advantage of ECs to profit’. In the spirit of returning the EC scheme back to its original motivation of helping out ‘sandwiched class’ families who may need the space but are unable to pay for private property, Mr. Khaw has told Parliament that the Government changed the EC rules as soon as they realised what some buyers had caught on to. He referred to the fact that now EC units will be capped at 160 sq metres and only multi-generational families can apply. Apparently some families were immediately renting out their dual-key units.

Stay tuned for a lot of change.

14 Jan

Outdoor space loophole – Who benefits?

Current property policies do not  disallow developers to sell free spaces for profit. What free spaces? The space, for example, that comes with your EC “sky suite” or “sky terrace”. The developers may not have paid development charges on them, yet they are charging sky-high prices for this open spaces which adds loads of bucks on an otherwise normal apartment unit.

Forestville EC

Who truly profits from this use of outdoor space? Could the property buyers have thousands, if not hundreds of thousands, on units which claimed to come with huge outdoor areas?

Housing minister, Khaw Boon Wan, has said on his blog that these open spaces were originally meant for developers to create communal spaces for residents and to promote greenery. Instead, you get a few penthouses and sky suites with private open spaces. How would other residents and buyers feel about this? If you’re the buyer of these units, would you think it’s fair to have paid the prices you’ve paid for space which the developer basically got for free? Or do developers have a free say and free play about how the space they bid for are used? What guidelines are there for such spaces?

Photo by the Ministry of National Development

Photo by the Ministry of National Development

In his blog post titled “Who gets short-changed?“, Mr. Khaw also mentions that for the space of one penthouse, the developers could have sold two or more units, each at a higher psf price. Although there are no hard and fast rules for the use of such spaces, for now,  the intention of its use as communal space may be misappropriated even further in future. Also, buyers may not know, but they are unable to cover up or enclose these ‘open’ spaces which came with their units.

Expect some changes. Soon.

«Older Posts