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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.

19 Mar

February’s amazing new home sales

Amazingly low, that is. With figures not seen for more than a year, it looks like the Chinese New Year general pausa and January’s cooling measures have hit the private property market hard. For now. http://blog.iproperty.com.sg/wp-admin/post-new.php

February saw a 65 per cent fall in the number of home sales. 2, 016 home were sold in January while only 708 were sold in February. Some of the condominiums which fared well were D’Leedon at a median price of $1, 540 psf and Q Bay Residences in Tampines at $1, 041 psf.

How will Singapore's private property market react to the recent housing policy changes?

But the developers are back with more offers, and dangling attractive discounts and partial absorption of stamp duty to bait buyers back into the market. With the way response was over last weekend’s new property launches, March’s numbers could very well bounce back double.

Buyers seem to be ditching their wait-and-see attitude and as long as there are no further property curbs, they will be back before you can say “uncle”. Head of research at SLP International Mr Nicholas Mak, is expecting private home sales to run between 3, 000 to 5, 000 units a quarter. That is 12, 000 to 20, 000 private homes in 2013.

Though new launches in March and HDB’s regulation overhauls might effect a U-turn and drag numbers up once more, it may be months before results show.

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.

5 Feb

HDB flat prices – New versus Resale

Do prices of BTO HDB flats rise in parallel to resale units? No, says the Singapore Government.

In line with their aim to keep new flat prices affordable for first-time buyers, National Development Minister, Khaw Boon Wan, has emphasized that BTO flat prices are in no way linked to the market prices of resale HDB flats.

Tampines Court BTO HDB flats, part of HDB's latest January 2013 launch. Photo by HDB.

Tampines Court BTO HDB flats, part of HDB’s latest January 2013 launch. Photo by HDB.

Addressing concerns that BTO prices may be dancing hand-in-hand with resale HDB flats, which have been on the rise for the past few quarters, Mr. Khaw promises to provide abundant and affordable housing to match the projected 6.9 million population of 2030. He says that as long as ‘property remains hot’, the new pricing policy of de-linking BTO flats to resale HDB flats will continue. It looks like this policy may have to stay for quite some time yet, as market feedback shows that prices are still going strong and have barely shown signs of letting up.
Industry players are not expecting the new HDB flats to take too much away from the resale flat market. SLP International’s head of research Nicholas Mak says that low prices of new flats may ‘effectively slow down the resale market but will not stop or reverse rising trends yet’.  However, Mr. Khaw did mention that although BTO prices will be priced differently from resale flats, there will be differences within its own category. He says HDB will not be pricing its new flats ‘haphazardly’ but instead, buyers can expect prices of BTO flats in mature estates to be up to 40 per cent more than those in outlying suburbs.

This keeping of prices low does come at a price. Taxpayers are essentially paying for the gap between new flats and resale flats. Because HDB purchases land from SLA (the Singapore Land Authority), land prices are based on the prices of resale flats in the vicinity, thus if resale flat prices are rising, land is more expensive, but if new flat prices are still kept low, the amount difference is made up by government subsidies, which indirectly comes from the taxpayers’ coffers.

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)?

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.

2 Jan

Property makeover for 8 private estates

Under the Estate Upgrading Programme (EUP), 8 private estates will be getting a whole new look by the end of 2014. Although it may not extensively change the property prices, it may nevertheless provide an added incentive to potential buyers and thus benefit the sellers.

Mount Rosei GardenWhich estates are these?

What they will be getting are landscaped environments, fitness equipment, park furniture and wider footpaths, according to the Ministry of National Development. Selection was based on the age, physical condition and scope of improvement. As the areas have begun to look dated and some plagued with drainage and parking issues, the revamp will cost about $29 million.

Marine Parade GRC MP Fatimah Lateef and Potong Pasir MP Sitoh Yih Pin are looking forward to improvements for their wards. In all, there has been a high demand for these government-funded upgrading schemes and Senior Parliamentary Seretary for National development, Dr. Maliki, has reflected strong spport for such programmes as it is aimed at improving community bonding.

All in time for the next election perhaps? Either ways, about 7,000 households will benefit from these estate upgrades, but how much more these new amenities and facilities will bring to the properties in these districts still awaits further analysis.

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