Tuesday, Mar 13, 2012
The Business Times  
  
Finding the sweet spot  
 
By Alan Cheong

WITH the stock of unlaunched high-end condominiums stacking up, prospects for these properties appear worrisome. It hasn't helped that a 10 per cent additional buyer's stamp duty (ABSD) has been slapped on foreign buyers, who traditionally favour this segment.

Will developers submit to market forces or can they simply batten down the hatches and wait out the storm?

It has been a turbulent 2011 for the private residential market. The government imposed two rounds of stamp duty actions on property transactions even as a growing number of analysts were of the view that prices would be affected by increasing supply.

Even before the ABSD was imposed in December last year, there were some 6,000 high-end units alone with permission to launch but which had yet to do so.

And in a surprising development, attention shifted to the mass market segment. The chart shows that in 2011, mass-market properties dominated sales. The question for developers now is what strategy to adopt for their mid-tier and high-end projects.

The simple answer might be to complete the unsold inventory and rent out the units to the increasing number of foreigners here. However, despite the buoyant rental market, anecdotal feedback from developers indicates that there could be a mismatch between tenants' budgets and the stock available (that is, mostly large units). So there are no straightforward solutions.

With the residential sector in a time of flux, we offer some pointers that could help both developers and buyers find the sweet spot in the current market. Our analysis focuses on unit size and absolute quantum paid, rather than price per square foot (psf) since the latter is a by-product of the first two factors.

The following are some salient facts about buyers' preferences:

Buyers' preference by size

Since 2007, there has been rapid growth in transactions of units under 800 sq ft. In 2011, this segment accounted for 24 per cent of all non-landed private homes sold (excluding executive condos or ECs). In 2007, it was just 8 per cent.

Buyers' preference by price

In terms of absolute quantums, the largest segment in 2011 was in the range of $600,000 to $1 million. Next was the $1-1.5 million segment. Together, these two segments made up two-thirds of non-landed properties sold last year (excluding ECs).

 Foreign buyers' make-up

For both mid-tier and high-end properties, Chinese nationals, Malaysians and Indonesians have been consistently present in the market. One interesting observation is that buyers from India are not active in the high-end segment.

Foreign buyers' purchase quantums

For high-end properties (represented by the Core Central Region or CCR), Chinese nationals have been buying units mostly ranging from $2-3 million. This is similar to the price range for Indonesian buyers.

For mid-tier properties (represented by Rest of Central Region or RCR), Chinese buyers preferred units priced between $500,000 and $1 million, while the Indonesians mostly bought properties in the $1-1.5 million bracket.

Rental

Total leasing transactions for private residential properties in 2011 hit a record 45,062, which was 8.4 per cent higher than the previous record in 2010 of 41,573.

Median rentals have also surpassed the previous peak in 2008. As more so-called shoebox apartments come on the market and are leased, rental rates on a per sq ft basis should be ratcheted up. With these five statistics, we can start to analyse what developers and buyers should look for to enhance the development saleability and liquidity of their investment. Given that real estate is a relatively illiquid investment, end-buyers purchasing for occupation or investment must consider the liquidity factor.

Looking at transactions by size, demand has been growing fastest for units under 800 sq ft and that goes for all segments, from mass market to high-end.

In part, this trend has been spurred by the penchant to own real estate even by those with limited financial resources.

A small unit makes the absolute quantums more manageable. Despite the higher prices on a psf basis, many such units cost less than $1 million. A few years back, they would have been deemed speculative investments because the rental market for such small apartments was untested.

However, given the weaker economic climate, the profile of expatriates coming to Singapore is changing. The high-budget tenant is giving way to one who is likely to be single, with a more constrained housing budget, and an employment contract that is likely to be localised within two or three years.

Therefore, these newer expatriates may not mind smaller apartments. So it appears that the speculators who took a bet on the shoebox apartment concept have won big.

Foreign buyers in search of mid-tier units have made districts 15 (Katong, Joo Chiat and Amber Road) and 21 (Upper Bukit Timah, Clementi, Ulu Pandan) their top two preferred districts in the past two years.

For high-end residential, over the same period, the top three districts were, not surprisingly, 9, 10 and 11.

But developers and buyers should go beyond these broad trends to find out the preference of different nationalities within each tier of the market.

For mid-tier non-landed properties (as proxied by the Rest of Central Region), the mainland Chinese - who make up the biggest group of foreign buyers in this segment with a 26 per cent share - have a preference for units priced between $500,000 and $1 million.

Indonesians, the third largest pool of foreign buyers in this tier, are prepared to spend more - from $1 million to $1.5 million.

For high-end properties, Chinese buyers mostly prefer to spend $2-3 million on non-landed properties, similar to the Indonesians. But, in these prime districts, Indonesian buyers outnumber the Chinese. The former make up 28 per cent of foreign buyers while the Chinese rank second, with a 20 per cent share.

Investors who keep a property to lease out should be happy to note that the rental market is extremely healthy. But they must note the changing profile of expatriates here. With less generous employment terms going forward, such tenants may prefer to rent either HDB flats or smaller private apartments.

Wednesday, Mar 14, 2012
The Business Times  
  
Big property deals now in cold storage  
 
By Kalpana Rashiwala

Investment sales of property so far this quarter have plunged to their lowest levels in two years - to about $3.4 billion as at March 12, although the final figure for Q1 could rise to around $3.8 billion, estimates Savills Singapore. The tally as at March 12 reflects declines of about 57 per cent from $7.7 billion for Q4 2011 and 60 per cent from Q1 2011's $8.4 billion.

Savills attributes the decline in the Q1 2012 investment sales to weaker market sentiment on the back of global economic uncertainty, compounded by the impact of recent government measures to stabilise the property market, such as the additional buyer's stamp duty (ABSD) and rules for industrial developments on Government Land Sales (GLS) sites sold from 2012.

Investment sales reflect the confidence of major property players in the sector's mid to long-term prospects. Savills defines investment sales as deals of at least $10 million but includes sales of GLS sites, acquisitions by real estate investment trusts (Reits) and residential collective sales below that amount.

Savills executive director (investment sales) Steven Ming expects the investment sales market to remain tepid in the near term as caution reigns amid macroeconomic volatility.

Despite ample liquidity and demand in the market, there remains a mismatch between buyers' and sellers' expectations. However, he detects a slight improvement in investors' sentiment and predicts that once macro-concerns begin to fade, there could be a resurgence in transaction.

'Investors keen on Asia will not ignore Singapore, given its safe and transparent markets,' he says. He also predicts that 2012 could be a tale of two halves - with H1 seeing tepid investment sales dominated mostly by GLS, and H2, if there is an improvement in global macroeconomic stability, may see more private deals as the bid-ask gap closes.

Mr Ming predicts the year could end with $20 billion to $23 billion of investment sales, down from $29.5 billion last year and $31.4 billion for 2010. However, this would still be higher than $7.6 billion in 2009.

For the Q1 2012 figure (up to March 12), the public sector accounted for $2.2 billion or nearly 65 per cent of total investment sales.

The residential sector made up about $2.3 billion or 68 per cent of total investment deals. Residential deals emanating from the private sector dropped 71 per cent quarter on quarter to $429 million, while the figure for the public sector dipped just 0.4 per cent to $1.84 billion. Although developer sales of private homes slowed down after the introduction of the ABSD on Dec 8, sales have regained momentum quickly, especially in the mass market. This has spurred developers to remain active at GLS tenders, notes Savills.

However, for high-end apartments and condos, transaction activity has come to a standstill. Thus far this year, only two caveats above $10 million each have been lodged, down from nine in Q4 2011 and 18 in Q1 2011. 'It appears that the introduction of the ABSD has a greater impact on this sector, where overseas demand has been high.' Effective Dec 8, 2011, foreigners have to pay a 10 per cent ABSD rate for any purchases of residential properties.

Market watchers say residential collective sales have also slowed down as developers must now undertake to complete developing projects on any residential sites purchased from Dec 8 and selling all the units within five years from the date of contract or agreement to purchase the site - if they don't wish to pay the 10 per cent ABSD.

Credo Real Estate figures show that just three en bloc sales totalling $145 million have been sealed since the start of the year, the biggest of which was $96.2 million for Seletar Garden. This is a marked drop from the nearly $745 million for Q1 last year and $789 million in Q4.

Credo's deputy managing director Tan Hong Boon forecasts that the year will end with about $1.5 billion to $2 billion of en bloc sales, down from $3.2 billion last year. 'Smaller sites will continue to find buyers given the lower risk,' he added.

Mr Ming too notes that given the protracted sale process that comes with a collective sale, 'the additional duty is substantial and the developer can potentially erase all projected profits, and risks assuming a loss-making position if the market goes south'. This year's successful en bloc sales will be dominated mainly by smaller sites or sites with a commercial redevelopment component, he added.

Total investment sales in the commercial sector (public and private) have amounted to $822 million so far in Q1, down 68 per cent quarter on quarter. The only notable deal this year has been Twenty Anson, at $430 million.

Ashish Manchharam, head of investments, SE Asia, at Jones Lang LaSalle, which brokered that deal, says: 'The office investment sales market is expected to be quieter this year as office rentals are expected to be soft in the first half. We expect rents to stabilise in H2 and capital values and deals to increase.'

Thursday, Mar 15, 2012
my paper  
  
Older Sers-affected residents can use more from CPF to buy flat  
 
By Victoria Barker

The Housing Board (HDB) yesterday announced several tweaks to its Selective En Bloc Redevelopment Scheme (Sers), to make it "more favourable" for residents who are forced to relocate.

In a written response to media queries, HDB said that from this month, those affected by Sers will be given priority allocation in "public sales exercises".

These include upcoming Build-To-Order (BTO) launches and Sale of Balance Flats (SBF) exercises, where 5 per cent of the flat supply is set aside for priority applicants.

Sers residents may apply under the Resettlement/ Relocation/ Tenants' Priority Scheme, which also applies to rental-flat residents who intend to buy a flat.

Should they be unsuccessful under this quota, Sers applicants will still be included in a second round of computer ballots.

"HDB regularly reviews its policies and processes to ensure they remain relevant and meet the needs of residents," HDB said, adding that it has taken into consideration feedback from residents.

Currently, those affected by Sers are assured of a new replacement flat at a nearby location, and may also ballot for BTO or SBF flats, while enjoying a discount of up to $30,000 if eligible.

Affected property owners also get market-value compensation.

To make the best use of land, older buildings are selected and re-developed under Sers, which was launched in 1995.

The tweaks come in the wake of the announcement of several en bloc projects, including that of Rochor Centre last November, which has been acquired to facilitate construction of the North-South Expressway.

The acquisition affects 567 HDB flats in four blocks, as well as 187 shops and eateries.

The expressway is scheduled for completion in 2020.

Other concessionary enhancements for Sers residents include the option to defer the entire resale levy until they sell or trans--fer their replacement flat.

The resale levy is the fee a buyer pays HDB when purchasing a second subsidised flat, and aims to maintain a fair allocation of subsidies for first- and second-timer households.

Owners can now also choose to pay a capped levy amount of $30,000 before collecting the keys to their replacement flats, and have the remainder waived.

Previously, affected residents had to pay $30,000 of the resale levy upfront, while holding off paying the remainder interest- free until the replacement flat was sold or changed hands.

Older Sers-affected residents can use more from CPF to buy flat

In addition, those above 55 will now be able to use more from their Central Provident Fund (CPF) to buy the replacement flat, should their current finances prove insufficient.

The changes will also apply to Sers projects in Clementi Avenue 5, East Coast Road, Redhill Close and Boon Lay Drive.

The changes will benefit a total of 2,553 households.

HDB said it will grant all its shop tenants at Rochor Centre a 10 per cent rental rebate from next month.

This is in addition to existing rebates granted earlier, in tandem with works on the Downtown Line.

Thursday, Mar 15, 2012
AsiaOne  
 
HDB, URA to release four residential sites this month  
 
The Housing and Development Board (HDB) launched two Executive Condominium (EC) land parcels at Woodlands Avenue 5 and Tampines Central 7 for sale today under the 1H2012 Confirmed List.

The two sites can yield about 1,300 housing units.

This is part of the four residential sites that HDB and the Urban Redevelopment Authority (URA) are jointly releasing this March.

URA will be releasing two other residential sites at Tampines Avenue 10 (Parcel A & Parcel B) for sale on March 28, 2012. Parcel A will be released for sale via the Confirmed List while Parcel B will be made available for application for sale on the Reserve List.

These two private residential sites can potentially yield another 1,115 housing units.

Friday, Mar 16, 2012
The New Paper  
  
Toa Payoh flat sold after just 3 years  
 
By Lediati Tan

THE sale of a three-year-old five-room flat in Toa Payoh last month raised some eyebrows and caused a buzz online.

Netizens wanted to know why the owner was able to sell the flat just three years after its completion.

They were also excited by the price it was sold for.

The flat, located between the 36th and 40th storeys of Block 79C in Toa Payoh Central, had fetched $894,000 - a record for the Toa Payoh area.

It meant that the flat's seller sold the flat for more than twice the amount he paid for it - which would have cost him less than $400,000.

An HDB spokesman said the block of flats was built as a replacement block to rehouse residents under the Selective En Bloc Redevelopment Scheme(Sers). The minimum occupation period (MOP) for Sers replacement flats is seven years from the selection date of the flat, or five years from the flat's effective date of purchase, whichever is earlier.

The spokesman added: "For Sers replacement flats that have met the requisite period, the flat owners may sell them in the open market.

"For the case you cited, the seller had already met the seven-year MOP, and hence was eligible to sell his flat in the open market...

"We also wish to emphasise that such transactions do not represent the bulk of resale cases."

Mr Lee Sze Teck, senior manager for research and consultancy at DWG Group, told The New Paper that it is not common for people to want to sell their Sers replacement flat soon after meeting the MOP.

Said Mr Lee: "It's not very often that you get Sers that is very near the MRT. It's quite unlikely that I would want to sell at once (after the MOP is met)..."

Chief executive of PropNex Realty, Mr Mohamed Ismail, estimated that only about one in five flat owners under Sers would consider selling their property once the MOP is fulfilled.

The high price fetched by the flat is also unique.

Seller was 'lucky'

Said Mr Ismail: "The seller was lucky for a number of reasons.

"He has fulfilled the seven years under Sers. He may also have bought it at a slight discount under the Sers subsidy. And the flat has a central location in Toa Payoh."

Adding to the uniqueness is the fact that the flat is only three years old and there were likely no such units up for sale in that block at that time.

The HDB's website states that the median resale price for a five-room flat in Toa Payoh in the fourth quarter of last year was $645,000 and the median cash-over-valuation (COV) for such a flat in the same period was $56,500.

The HDB spokesman said that interested flat buyers have a wide range of choices in terms of location, design and prices in the HDB resale market.

She said: "They may also buy a build-to-order (BTO) flat from HDB if they meet the eligibility conditions. Flat buyers are advised to consider their options carefully."

ERA Realty agent Shawn Guan, 31, who represented the seller of the Toa Payoh flat, told TNP that he sold it because he was considering upgrading to another property or migrating to another country.

Mr Guan, who has three years' experience in the industry, added that the owner had expected to sell the flat at more than $900,000, but eventually settled for $894,000 with a COV of more than $100,000.

He said that the buyers are a Singaporean couple in their mid-20s who wanted to buy a flat in Toa Payoh as their family also lived there.

But Mr Ismail questioned whether it was a good move for the buyer to pay almost $900,000 for a five-room flat.

At that price, he said, there are many other options available, including executive condominiums (ECs) in the outlying areas which are going at roughly the same price of $750 per sq ft, and comes with full facilities and better potential in time to come.

Also, with more BTO flats expected in the market in the next few years, there is no guarantee that the buyer can sell the flat at a profit in five years' time, he said.

The flat is now a novelty because it's the only one on the market, said Mr Ismail, but this would no longer be the case in five years, when its neighbours meet the MOP.

"If this flat is sold for anything less than $1 million, the buyer is unlikely to make any profit, taking into account the stamp duty and the accrued interest on CPFor bank loans for the flat," said Mr Ismail.

Ms Lee Bee Wah, chairman of the Government Parliamentary Committee for National Development and Environment, said that the sale of the Toa Payoh flat should not be a cause for concern as it is likely to be a one-off transaction.

She said that with the addition of 25,000 BTO units this year and more ECs in the pipeline, prices are expected to stabilise and have a cooling effect on the resale market.

High-end homes still hot

THE record $39 million fetched by a seafronting bungalow on Cove Drive at Sentosa Cove set tongues wagging earlier this month.

But even that is a far cry, in terms of absolute price, from the $68-million asking price for a five-bedroom good-class bungalow in Ridout Road.

This is despite the slew of cooling measures that the Government introduced last year.

my paper reported on Monday that if the Ridout Road property owner gets his wish, his property would fetch more than last year's top transaction of $59.5 million for a bungalow on Yarwood Avenue in Bukit Timah.

Mr Png Poh Soon - head of consultancy and research at Knight Frank - said that the cooling measures introduced on the high-end landed property market in January and December last year had only marginal impact.

The measures included extending the seller's stamp duty from three years to four years with rates ranging from 4 to 16 per cent, and an additional buyer's stamp duty (ABSD), where citizens buying their third home and permanent residents buying their second home have to pay a 3 per cent ABSD.

Foreigners buying any residential property pay an additional 10 per cent on top of the existing rates.

Friday, Mar 16, 2012
AsiaOne  
 
Record number of new private homes sold in Feb  
 
Despite new cooling measures and uncertain economic conditions, the property market registered record sales in February with 3,138 new private homes sold.

The figure is propelled by the 725 executive condominium (EC) units sold. Without this, the figure drops to 2,413 homes. This is lower than the 2,772 non-EC private units sold in July 2009.

The EC sales figure is the highest monthly figure since EC sales resumed in October 2010.

Developers had launched a string of projects last month, making more homes available compared to January. January sales were robust as well, with 2,077 units sold that month.

However, despite the rosy sales figure, the number of unsold units also hit a record high, with 7,586 units left in the market due to the large number of projects, reported The Straits Times.

Most of the units sold were from the city fringe, with five times more homes sold here than in January. 75 per cent of the total sales came from the mass market segment.

The Straits Times reported that experts attributed the positive sales sentiment to low interest rates, market liquidity, and the lack of alternative investments.

This is as the prices of DBSS developments are usually significantly higher than BTO flats, and Trivelis buyers say they would not have bought DBSS units had they known there was a BTO project coming up near by.

Last October, EL Development launched Trivelis, to be located along Clementi Ave 4.

The 888 units saw a high take up rate of about 80 per cent, as buyers snapped them up due to their good location. According to EL, the site is a five minute walk to Clementi MRT and Bus Interchange.

It is also located near three shopping centres and the National University of Singapore.

In January this year, HDB announced the launch of a 670-unit BTO project right next to Trivelis - next to Clementi Avenue and Commonwealth Avenue junction.

According to ST, the prices for the BTO flats could be as much as 25 per cent lower than the Trivelis units. The cost of Trivelis units range from $375,000 for the cheapest three-room flat, to as high as $770,000 for a five-room flat.

However, analysts interviewed sounded a note of caution for Trivelis buyers thinking of dropping out: The popularity of Clementi as a mature estate means that they face a high chance of not getting a BTO unit.

In addition, those who do not exercise their option to buy their units will also have to forfeit the deposit., which is 1.25 per cent of the purchase price.

For a five-room Trivelis unit costing about $700,000, this comes up to about $8,750.

If they have already exercised their option, the penalty will be 20 per cent of the cost of the flat.

About 100 people who have bought a Trivelis unit have not exercised their option, ST reported.

EL said that so far, two buyers have pulled out due to the upcoming BTO launch.

EL spokesperson Lim Yew Soon said that they have received feedback from buyers, but said that the Clementi BTO project also came as a shock to them, having only found out in January, at the same time as the rest of the population.

Wednesday, Mar 21, 2012
AsiaOne  
 
3-bedroom condo unit smaller than a squash court  
 
A new condominium in Bukit Batok is one of the smallest 3-bedroom unit to be built in Singapore.

Measuring just 635 sq ft, the unit at Natura at Hillview Terrace is smaller than a squash court and slightly bigger than five HDB carpark spaces, reported The Straits Times. 

A typical three-bedroom apartment is between 1,000 and 1,500 sq ft, said real estate consultants, and it is unheard of for a mass market project here to have three-bedroom units of such a compact size.

The development is a joint venture between Roxy-Pacific Holdings and Macly Group, and market watchers say that the developers are setting a trend for shrinking three-bedroom units.

Another company's projects, Treescape in Telok Kurau, also features micro three-bedders which start from 603 sq ft.

According to The Straits Times, all 32 units have been sold since the project was launch, of which 25 units were sold last month at a median price of $1,401 per sq ft.

Compared to Treescape, which is a boutique development, Natura has full condominium facilities with 193 units.

Projects director of Macly Group Ken Yeo defended the size of the apartments, saying that the wall can be taken out so open up the living room to be of a bigger space.

Such units are likely to be bought by singles or childless couples who prefer a smaller living space, Mr Yeo reckons.

Mr Tan Kok Keong from OrangeTee's head of research and consultancy used Hong Kong as an example on whether such units will be well-received by the public.

He told The Straits Times: "If you use Hong Kong as an example, yes it's liveable, but whether it's the kind of quality of life that people can get used to is something we actually won't know until the project is completed."

Monday, Mar 26, 2012
The Business Times  
 
Get smart on property financing  
 
By Dennis Ng

JUST mention "property financing" and some people start to get a headache, especially those who do not like to look at or crunch numbers.

Fret not, we share with you some tips in this article that will help you get savvy on property financing, including the latest rules and finer details.

Property cooling measures - how do they affect your housing loan?

If you have an existing housing loan, for the next property you purchase, you can get a maximum of only 60 per cent financing, which means you will need to come up with at least 40 per cent of the purchase price yourself including at least 10 per cent cash.

If you have an existing property which uses Central Provident Fund (CPF) savings, when you purchase a second property and wish to use your CPF, you need to set aside the CPF Minimum Sum Cash Component, which currently stands at $65,500. This CPF Minimum Sum Cash Component is made up of balances in your CPF Ordinary Account and CPF Special Account.

Here's an example.

If you have $50,000 in your CPF Ordinary Account and $30,000 in your CPF Special Account totalling $80,000, how much CPF savings can you use to purchase your second property? You need to deduct the CPF Minimum Sum Cash Component (currently at $65,500 and revised upwards annually on July 1 of each year). In this example, the maximum CPF savings you can use for the purchase of your second property is $14,500, not the full $50,000 balance in your CPF Ordinary Account.

However, if you have an existing property which is fully paid up, you can still get the maximum 80 per cent financing on your next property purchase. This is regardless of how many properties you currently own, as the maximum 60 per cent financing applies only to people with at least one existing property loan.

Thus, some clients with a very low housing loan outstanding on their existing home will choose to pay off the existing loan in order to qualify for the 80 per cent financing for their next property purchase.

If you are looking at property as an investment and are in no hurry to invest, do not rush to pay off your existing property loan because there is a possibility that this maximum 60 per cent financing rule might be abolished when the property market turns sluggish. If history serves as any guide, in May 1996, a slew of property cooling measures were announced, but these were removed when the property market corrected significantly a few years later.

Taking housing loans on home purchase vs property investment: any difference?

If you ask most people, they will probably tell you that they want to borrow as little money as possible for property purchase, and if they can afford it, they will pay off their housing loan as soon as possible. Is there a difference in taking housing loan on home purchase vs property investment?

For a home purchase, I would suggest taking the maximum financing approved by the bank, which is currently 80 per cent for the first property purchase, even if you can afford to borrow less. Why? Because to me, I see a housing loan instalment as a form of "rental replacement", because if you decide not to buy a property for own use, you would have to pay rent. So taking a lower loan, in a way, is similar to paying rent in advance, which does not make sense.

Furthermore, a housing loan is the cheapest loan you can ever get; currently the interest rates are about 1.2 per cent - less than half of the 2.5 per cent that CPF pays you.

So for a home purchase, it is okay to take the maximum 80 per cent financing and as for the loan period, this should tie in with your intended retirement age. If you intend to retire at age 60, then the loan should be fully paid off by age 60 and not 70, for example.

You should also only buy a home that you can comfortably afford by making sure that your housing loan instalment does not exceed 35 per cent of your gross income. For a home purchase, you can consider using two thirds of your CPF Ordinary Account contribution and top up in cash payment any excess amount.

Why not use up all of your CPF Ordinary Account contribution? The reason is we must remember that the primary objective of our CPF is to build a retirement nest egg and thus, we should try not to use up all of our CPF Ordinary Account savings for property financing.

For property investment, even prior to the current loan-to-value limits taking effect and when you could take 80 per cent financing, for prudence's sake, you might want to limit maximum financing to 70 per cent of the property price.

By doing so, even if property prices fall, you minimise the risk that the bank would ask you to top up money. For instance, if you take 80 per cent financing and if property prices fall by 30 per cent, the bank might ask you to top up 10 per cent. However, if you take 70 per cent loan, this is unlikely to happen.

Should you apply for a loan for a property that will receive Temporary Occupation Permit (TOP) three years from now?

If you buy a property under construction, you can choose to apply for a housing loan later rather than at the point of purchase.

However, you should consider applying for a loan now because firstly, property prices can move up or down and banks would only grant financing based on latest valuation figures.

In the event that property prices fall when the property is completed and the valuation falls, you might fail to get the quantum of financing you need.

Furthermore, there might also be changes to your income and financial situation, which might affect loan approval.

Thus, it is advisable for you to apply for a housing loan at the point of property purchase rather than to wait.

Would interest rates remain low for housing loans?

Singapore Interbank Offered Rate (Sibor) is the average market interest rate banks pay when they borrow from or lend to one another in the interbank market. 

The three-month Sibor is used by banks as a gauge of interest rate trends. Thus, If you want to know the trend of interest rates on housing loans, you should keep a close watch on the movement of the three-month Sibor.

Currently, the three-month Sibor is at about 0.39 per cent and may remain low for the next six to 12 months if US interest rates stay low.

However, interest rates do not stay at low levels forever.

Thus, if you are worried about the possibility of interest rates moving up in 2013 and beyond, you might want to choose a housing loan package with fixed interest rates for the next three years, or a Sibor-pegged package that has a "cap" on interest rates for the next few years.

If you plan to sell your property within the next two to three years, then you might want to consider home loan packages with a shorter penalty period or with zero penalty period instead.

There are frequent changes to packages offered by banks and at any one time, there might be over 113 different packages offered by 16 major financial institutions in Singapore.

Thus, you may wish to consider engaging the services of an independent mortgage broker who can provide you with unbiased analysis and comparison of all home loan packages from all banks.

Typically, the service is provided to you free as banks would pay them a fee separately

Tuesday, Mar 27, 2012
AsiaOne  
  
8,000 flats to be launched Wednesday  
 
8,000 flats will be launched by the Housing Development Board (HDB) on Wednesday through a joint Build-to-Order (BTO) and Sale of Balance Flats exercise.

Minister for National Development Khaw Boon Wan said on his blog that the flats will be launched in mature and non-mature estates and cover the full range of flat types.

"With the wide range of flats offered, flat buyers will be able to apply for one that best meet their needs, and in an estate of their choice," he said.

However, Mr Khaw said demand for the flats is expected to be strong and that those who want to have a better chance of getting their flats should widen their choice and consider applying for a BTO flat in the non-mature estates.

Local news reports said the new flats will be in estates such as Bukit Timah, Bedok and Clementi.

Mr Khaw said the results of the launch will help HDB calibrate the BTO rules for future launches so that policy objectives are met.

"Our priority remains to help first-timers get their first HDB flat as quickly as possible, so that they can proceed to start their family," he said.

The HDB announced a slew of measures early this month to aid various groups of home buyers, including the enhanced Married Child Priority Scheme and a new Multi-Generation Priority Scheme to let married children live with or near their parents.

Wednesday, Mar 28, 2012
my paper  
 
New bumper crop of 8,000 flats  
 
By Sophie Hong

THE Housing Board (HDB) is launching a bumper crop of 8,000 flats today, through a joint Build-To-Order (BTO) and Sale of Balance Flats (SBF) exercise.

These flats are located in mature and non-mature estates such as Bedok, Toa Payoh and Bukit Timah, and cover the full range of flat types.

National Development Minister Khaw Boon Wan made the announcement yesterday on his blog, Housing Matters (mndsingapore.wordpress.com).

In a post titled A Bumper Launch To Support Strong Families With Babies, he said: "With the wide range of flats offered, flat buyers will be able to apply for one that best meets their needs, and in an estate of their choice."

The exercise comes after new measures to help various groups of home buyers were announced during the Budget debate in Parliament earlier this month.

In the post, Mr Khaw also said that he will monitor the application rates for flats to see how Singaporeans are responding to the initiatives.

"Clearly, nothing is cast in stone," he said. "The results of the launch will help us calibrate the BTO rules for future launches, to ensure that policy objectives are met."

He added that the priority is still to help first-time home buyers get their first flat quickly, so that they can proceed to start a family.

Mr Khaw said: "We can expect strong demand for the completed and near-completed flats in the mature estates.

"So those who want to have a better chance of success should widen their choices and consider applying for a BTO flat in the non-mature estates."

An enhanced Married Child Priority Scheme will also take effect today.

As mentioned by Mr Khaw during the Budget debate, the enhanced scheme will increase ballot chances for married couples who opt to live with their parents.

Before the adjustments, married couples living with or within 2km of their parents and who are first-time buyers would get four ballot chances, while second-timers would get two ballot chances if they apply for a flat under the scheme.

Under the new rules, ballot chances for first-timer couples rise to six and that for a second-timer three, if they live with their parents in their new flat.

Two new schemes introduced in Parliament also take effect today.

The first is the Multi-Generation Priority Scheme, which enables married couples and their parents to submit a joint application for a flat and a nearby studio apartment or two-room flat.

The other is the Ageing-in- Place Priority Scheme, which doubles the balloting chances for elderly applicants if they are applying for a studio apartment within 2km of their current home.

Balloting chances for BTO flats in non-mature estates for second-timers are also tripled.

Income ceiling raised for 2-room flats

Singaporean households whose incomes exceed $2,000 will now have an additional housing option.

HDB is raising the income ceiling for 2-room flats in mature towns/estates from $2,000 to $5,000 per month.

The income ceiling for 2-room flats in non-mature estates will remain at $2,000 to safeguard these flats for low-income families.

More flats in the pipeline

In its statement, HDB gives the assurance that if demand persists, it will continue to build flats.

To this end, HDB explains that to protect the interest of serious home buyers, it needs to ensure that the flats are only allocated to serious buyers. Thus, buyers are required to pay a nonrefundable booking fee when they select a unit and a 10 per cent downpayment when they sign the agreement.

To further discourage buyers who book a flat but subsequently cancel their booking, applicants will not be allowed to apply or be included as an essential occupier for a new HDB flat/DBSS flat/Executive Condominium unit or a resale flat with housing grants, within one year from the date of cancellation. This requirement will, however, be waived in exceptional circumstances beyond the control of the applicants.

HDB also advises flat buyers to apply for a BTO flat in non-mature towns/estates to enjoy a higher chance of success in securing a flat.

It is slated to launch 4,640 BTO flats for sale in Choa Chu Kang, Kallang Whampoa, Punggol and Sengkang in May 2012.

Wednesday, Mar 28, 2012
AsiaOne  
  
New measures to ensure only serious HDB flat buyers  
 
HDB has given the assurance that if demand persists, it will continue to build flats.

To this end, HDB explains that to protect the interest of serious home buyers, it needs to ensure that the flats are only allocated to serious buyers. Thus, buyers are required to pay a nonrefundable booking fee when they select a unit and a 10 per cent downpayment when they sign the agreement.

To further discourage buyers who book a flat but subsequently cancel their booking, applicants will not be allowed to apply or be included as an essential occupier for a new HDB flat/DBSS flat/Executive Condominium unit or a resale flat with housing grants, within one year from the date of cancellation. This requirement will, however, be waived in exceptional circumstances beyond the control of the applicants.

HDB also advises flat buyers to apply for a BTO flat in non-mature towns/estates to enjoy a higher chance of success in securing a flat.

It is slated to launch 4,640 BTO flats for sale in Choa Chu Kang, Kallang Whampoa, Punggol and Sengkang in May 2012.

Income ceiling raised for 2-room flats

Singaporean households whose incomes exceed $2,000 will now have an additional housing option.

HDB is raising the income ceiling for 2-room flats in mature towns/estates from $2,000 to $5,000 per month.

Thursday, Mar 29, 2012
The Business Times  
 
HDB upgraders between a rock and a hard place  
 
By Mindy Tan

SINGAPORE - With cash-over-valuation (COV) figures - the cash premium paid by buyers over an HDB flat's valuation - continuing to fall amid a slowing resale market, HDB upgraders are facing an increasingly uphill task of moving into the private market.

While HDB has stopped providing overall COV figures for resale flats, data from PropNex Realty, based on the firm's February resale deals, shows that median COVs have continued to fall in the range of $3,000 to $7,000, except for three-room units.

Based on the firm's January resale deals, median COV across all the flat types dipped by between $3,000 and $6,000. The median COV across all flat types is now about $25,000, compared to $35,000 in the fourth quarter of last year, industry players estimate.

The lower COVs have made it harder for people upgrading to private property since they will have less cash on hand, noted Chua Chor Hoon, head of Asia Pacific Research at DTZ. HBD upgraders constitute an important source of demand for mass market private projects.

The fall in COVs across the island - except for five-room and executive units in a handful of towns - is a harbinger of a weaker HDB resale market in 2012, said Ms Chua.

Property watchers said a combination of demand and supply side factors is reining in the HBD resale market by keeping both buyers and sellers on the sidelines.

Png Poh Soon, Knight Frank's head of consultancy and research, added: 'Prices of resale flats have appreciated significantly. For existing owners, there is no reason for them to sell at a lower price as private properties are not cheap either. To upgrade and avoid taking excessive financial burden, many need to sell off their existing HDB.'

'(On the other hand) buyers with financial constraints will turn to BTOs (build-to-order flats) because it is cheaper (while) those who can afford ECs (executive condominiums) believe they are getting a better deal as the price quantum between some resale flats and ECs are very close.' 

'Existing HDB owners looking to sell their units are therefore caught in a bind... Owners of resale units asking for higher prices may have to market their units longer so that they are able to attract the 'right' type of buyers. So long as private market prices continue to hold, HDB resale prices should remain stable. If the former increases further, HDB resale prices will also escalate.'

That more alternatives - in the form of the ramp-up in supply of BTO flats and ECs - are now available to buyers has also played a part in lowering demand.

ECs, a public-private hybrid, which are sold with condominium-like facilities, may be particularly attractive to buyers, given that the price quantum between some resale flats and ECs is only between 10 and 15 per cent, pointed out Knight Frank's Mr Png.

Various policy changes have further sweetened the allure of ECs. For instance, the monthly household income ceiling was increased from $10,000 to $12,000, making it easier for first-timer households to take the EC route, noted ERA Realty key executive officer Eugene Lim, in a report issued in February.

Further, Minister for National Development Khaw Boon Wan's promise to modify existing balloting rules for second-time buyers looking for BTO flats has further encouraged many to hold back their move into the resale market, he added.

'Should the new rules substantially increase the number of BTO flats made available to second-time buyers, the HDB resale market may be greatly impacted since these buyers form the bulk of the resale market,' said ERA's Mr Lim.

'When that happens, demand for resale flats will come only from families that have immediate housing needs, those downgrading from private properties, and singles and permanent residents who do not qualify to buy new HDB flats.'

In addition, as part of the cooling measures implemented in August 2010, owners of private property - including overseas residential properties - have to sell their private homes within six months of taking possession of the HDB flat should they purchase HDB resale flats.

This is another factor dampening demand.

And the price gap between new private properties - with the accompanying attractive discounts and sweeteners offered by developers - and HDB units may not be as big as it may seem, noted Mr Png.

'While psf prices have increased for private homes, the quantum difference between HDB resale and private units may not be excessively wide. This is because the size of new private homes are shrinking. Potential resale home buyers may prefer new private properties than older HDB resale flats,' he said.

According to Ong Kah Seng, director at R'ST Research, about one in seven homes sold by developers last year were shoebox apartments (up to 500 sq ft). Buyers snapped up a record 2,037 such units last year. Even as demand is being siphoned from the HDB resale market, recent policy changes, including the minimum occupation period of five years and the lowering of the loan-to-value limit to 60 per cent, alongside low average completion rates of new HDB flats between 2002 and 2010, have resulted in a general supply shortage of resale flats.

Supported by a buoyant rental market, more HDB owners also prefer to rent out their HDB units rather than sell it, since they would have to first sell any private property, if they should wish to buy a HDB flat again, after upgrading.

'Those who are not able to afford to purchase an additional private property will prefer status quo, and sit on a 'paper gain',' suggested Mr Ong. 'Moreover, the longer term price outlook for HDB resale flats are on the uptrend, particularly those in mature estates which have good property fundamentals.'

In addition, the increase in BTO flats, which mainly helps first-timers, cannot assuage the main bulk of demand for HDB resale flats from second-timers, singles, private property owners, and permanent residents, which remains high, said PropNex Realty's chief executive, Mohamed Ismail.

According to percentage breakdown given by MND, first-timers constitute 23 per cent of total demand. 'Moreover, BTO flats take three years to be completed, some newly married couples would still prefer to buy a HDB resale flat,' Mr Mohamed added.

In 2011, resale HDB transactions yielded only 24,633 units, a 24 per cent drop from 2010 figures. On the other hand, HDB resale flat prices hit a record high, after posting a 10.7 per cent increase in 2011. Prices increases are expected now to slow.

Thursday, Mar 29, 2012
my paper  
 
Income ceiling raised for 2-room flats in older towns  
 
By Sujin Thomas

SINGAPORE - The Housing Board (HDB) will raise the monthly household income ceiling for applicants of two-room flats in mature towns and estates to $5,000 from $2,000.

This will provide "an additional housing option for households who prefer to live in mature estates but whose monthly income exceeds $2,000", HDB said in a statement yesterday.

The income ceiling for two- room flats in non-mature estates will remain at $2,000 to safeguard these flats for low- income families, HDB added in the statement.

The move is among several initiatives to enhance housing options for the bumper launch of about 8,000 flats in yesterday's joint Build-To-Order (BTO) and Sale of Balance Flats (SBF) exercise.

The initiatives include providing more choices for married children who want to live near their parents, and increasing the chances for second-timers to secure BTO flats in non-mature estates.

HDB said it has ramped up its flat supply substantially - around 50,000 units over two years - to meet housing needs.

"If demand persists, we will continue to build more," it said.

HDB will require buyers to pay a non-refundable booking fee when they select a unit, and a 10 per cent down payment when they sign the agreement.

This is to ensure that the flats are allocated only to serious home buyers.

HDB also outlined a measure to further discourage buyers who book a flat but subsequently cancel their booking.

Such applicants will not be allowed to apply or be included as an essential occupier for one year from the date of cancellation.

The measure will apply to applications for new HDB flats, Design, Build and Sell Scheme flats, executive-condominium units or resale flats.

"The requirement will, however, be waived in exceptional circumstances beyond the control of the applicants," HDB said.

It added that it will offer 4,640 BTO flats for sale in Choa Chu Kang, Kallang, Whampoa, Punggol and Sengkang in May.

Applications for the new flats launched yesterday can be submitted online until Tuesday.

Thursday, Mar 29, 2012
AsiaOne  
  
Punggol EC site receives 10 bids  
 
An executive condominium housing site in Punggol received 10 bids today by the time tender for the site closed at 12pm today.

It was launched for tender on Feb 15 this year.

The 13,241.8 sq m site received a top bid of $136.7 million from Qingjian Realty (South Pacific) Group Pte Ltd.

This translates to $3,441.12 psm/GFA for the site, which has a maximum gross floor area (GFA) of 39,725.4 sq m.

The lowest bid was $103.52 million.

The site, located at Punggol Central / Edgefield Plains, has a lease term of 99 years.

Saturday, Mar 31, 2012
The New Paper  
 
Mad rush for HDB flats  
 
By Fabian Koh and Valerie Koh

Just hours after it was announced that 8,000 HDB flats were up for sale, applicants packed the HDB Hub in Toa Payoh.

By 8am Wednesday, a crowd of people were waiting to submit their applications.

Others went online in a mad rush to apply for a new home. Applications must be in by April 3. On Wednesday night, a spike in site traffic slowed the HDB website to a crawl.

HDB put up a notice on its website Wednesday, alerting netizens to the problem.

It reads: "Access to HDB InfoWEB is slower due to high traffic volume. We have increased our resources and seek your kind understanding."

The heavy traffic on the website follows Tuesday's announcement that about 8,000 flats were up for sale.

Of these, 4,153 units are Build-To-Order (BTO) flats in areas such as Bedok, Clementi, Toa Payoh, Geylang, Bukit Batok, Bukit Panjang and Bukit Timah.

The remaining 3,825 flats are leftovers from previous sales exercises.

But the trigger may have been that the units up for sale include those in mature estates such as Toa Payoh and Bishan.

HDB said first-time flat applicants will have priority.

Mr Colin Tan, director for research and consultancy at Chesterton Suntec International, said: "There are a large number of flats and a lot more choices. Everyone is rushing to apply so (that) they can have a chance to get their desired home."

He explained that the excitement is due to the location and price of flats.

"Mature estates, like Toa Payoh and Bishan, have been around for a while. They have more established amenities and are closer to the city, hence (they) are the more popular choices," said Mr Tan.

He added that new flats in mature estates are rare, due to the limited space, so people are jumping at the chance to apply for them.

Unsold units in mature estates can be many times cheaper than resale flats.

In Bishan, there were 18 unsold four-room flats going from $327,000, and 10 unsold five-room flats going from $492,000.

In Toa Payoh, another mature estate, there were 18unsold three- and four-room flats going from $217,000, and seven unsold five-room flats going from $458,000.

Contrast this with resale prices as of last month, when a five-room Bishan flat could cost over $700,000, and a five-room flat in Toa Payoh could cost over $800,000.

And that's not inclusive of cash-over-valuation.

Mr Tan added that apart from the mad dash for the flats in mature estates, there are also people who want to get a flat in new estates such as Sengkang and Punggol.

"There has been a general trend showing that prices in such areas are gradually coming down," he said.

He was surprised that HDB had not anticipated such heavy traffic on its website.

"Given only a few days to apply, many are flocking to the site, and I suspect HDB had underestimated the excitement it would cause with a release of such a bumper crop of flats," he said.

Frustrated

Some users were frustrated when they could not access the HDB site.

An educator in his 30s, who wanted to be known only as Mr Lee, said he tried to access the website between 3pm and 11.30pm Wednesday, but was unsuccessful.

The website also allows users to understand HDB rules and apply for things such as season parking. Mr Lee, who already owns an HDB flat, was annoyed by the experience.

"I had been trying to log into the website all day long to find out more information about my flat and I couldn't seem to," said an irate Mr Lee.

The total time spent trying to log into the site amounted to between two and three hours, he said. "It's frustrating because the information I need is quite urgent."

Mr Lee declined to say what he was trying to access on the site and maintained that HDB should have been more prepared for the heavy traffic.

"Their IT (department) should have taken necessary measures (to tackle this)," he said.

He was not the only user affected by the slowdown of the website.

Others aired their grievances online.

Some posted their comments on the Facebook page of National Development Minister Khaw Boon Wan.

By 11am Wednesday, a Facebook user named Stewart Sam had alerted other users of the problem.

"HDB('s) website is down. As usual the excuse is high traffic. What a letdown," he wrote on the minister's page.

Monday, Apr 02, 2012
AsiaOne  
  
Property agents want sellers who back out to pay up  
 
Some real estate agents want customers to compensate them if they back out of an exclusive agreement to sell a property.

This can happen if owners change their minds after asking agents to do detailed valuations of their homes and arrange for viewings, or refusing to sell when the agent finds a buyer who is willing to pay more than the asking price.

A housing agent told The Straits Times that at least two to three sellers back out every month because they were not sincere in selling. They only wanted to test the market, he said.

Now, he and other agents have exit clauses in their contracts where the owners have to pay them for marketing their homes so that owners know that there is an opportunity cost for the hours agents put in selling their homes.

These clauses usually state that the seller has to pay consultation fees between $150 and $250 and reimburse sums spent on advertising and valuation reports if he / she backs out without a valid reason. The total amount may come up to $500.

This is on top of getting the seller to sign the CEA's estate agency agreement forms, which give the agent exclusive rights to sell the home and claim commission.

Mutually agreed terms and conditions which are not printed in CEA's estate agency agreement can be included as additional terms in the space provided, or on a separate pink sheet of paper, another housing agent said.

According to The Straits Times, not all customers are happy with this practice. A home seller said she felt her agent was unprofessional in introducing cancellation fees and that it wasn't fair for her to pay $200 just because the agent did paperwork for her.

However, she agreed that it was fair for her to pay for the valuation report.

Other industry experts said such exit clauses could hurt an agent's standing or send the wrong signal to sellers.

Monday, Apr 02, 2012
AsiaOne  
 
Punggol EC site sold for $136.7 million  
 
The Housing and Development Board (HDB) has awarded the executive condominium (EC) housing site in Punggol to Qingjian Realty (South Pacific) Group Pte Ltd.

It had submitted the highest bid of $136.7 million for the 99-year leasehold site located at Punggol Central / Edgefield Plains.

This translates to $3,441.12 psm/GFA for the 13,241.8 sq m site, which has a maximum gross floor area (GFA) of 39,725.4 sq m.

The site had received 10 bids before the tender closed on March 29.

Tuesday, Apr 03, 2012
AsiaOne  
 
HDB receives over 26,000 applicants for 8,000 flats  
 
SINGAPORE - The demand for the 7,978 flats put on offer just a week ago has far outstripped the supply, with application rates soaring to over three times the supply number.

As the deadline for Build-To-Order (BTO) and Sales of Balance flats drew to a close on Tuesday, application numbers stood at around 26,350, The Straits Times reported.

The balance flats appeared to be a more popular choice, with overall subscription rate standing at 3.8.

This, analysts say, is likely due to the fact that most of them have already been built and are located in more mature estates.

For BTO flats, the larger four to five room flats saw higher application rate. Overall application rate stood at 2.9.

Minister for National Development Khaw Boon Wan said in his 'Housing Matters' blog that the application rates are 'reassuring'.

This is as the overall subscription rates for first and second-timers have generally decreased as compared to previous years.

For flats in mature estates, the overall first-timer application rate for BTO units was 2.1. This number decreased to 1.8 for non-mature estates.

The application rate for Sale of Balance Flats was 1.9.

This means that first-timers enjoy a better chance of securing a flat, Mr Khaw said.

He added that more second-timers will also stand a better chance at securing a flat.

The application rate for second-timers dropped to 6.7 in this round as compared to the 20.7 in the January BTO exercise.

In addition, more applicants made use of the enhanced Married Child Priority Scheme - which gives more chances to those who opt to stay near their parents - as compared to previous rounds, Mr Khaw said.

He added that eight pairs of parents and married children have applied for the new Multi Generation Priority Scheme in Bedok.

He said that this indicated that the policies put in place are working to meet the needs of flat buyers.

Wednesday, Apr 04, 2012
my paper  
  
Better odds for HDB second-timers  
 
By Kenny Chee and Reico Wong

More second-time buyers will be able to select a Housing Board (HDB) flat following the bumper launch of 8,000 HDB flats last month.

In a blog post yesterday, National Development Minister Khaw Boon Wan said that there were 10.2 of such applicants for each Build-To-Order (BTO) flat launched in both mature and non-mature estates, excluding studio apartments. This figure was much lower than the 25.6 for the previous BTO launch in January.

Mr Khaw said that, with the tripling of the BTO quota for second-timers in non-mature estates, application rates there were 6.7 for last month's launch, compared to 20.7 in January.

Application rates for second-timers improved for last month's Sale of Balance Flats (SBF) exercise as well.

Overall, there were 45.7 applicants for each flat, excluding studio apartments, yesterday - an improvement over the 56.3 rate in the previous SBF exercise in September last year.

First-timers continue to enjoy a high chance of securing their first flat, said Mr Khaw.

Overall, there were 2.1 applicants per flat for last month's BTO launch. The January exercise had a lower rate of 1.6. For last month's SBF exercise, there were 1.9 applicants per flat, compared to 3.8 last September.

In non-mature estates, the rate last month was 1.8 for BTO flats, which Mr Khaw said "is even more reassuring".

"(First-timers) who applied for these BTO flats are almost assured of a flat, even though we have tripled the chances for second-timers."

There were about 26,000 applications as of 5pm yesterday for the 8,000 units in last month's BTO and SBF exercise.

On whether the improved rates for second-timers came at the expense of first-timers, Mr Mark Teo, a senior group division director at ERA Realty Network, said there could be "some give and take" as the Government juggles the demands of both groups of home buyers.

"But it is not a critical factor as the (Government) is going to push out more flats," he said.

Mr Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group, said "the bulk of launches will still be reserved for the first-timers".

Mr Teo and Mr Lee do not expect further property cooling measures any time soon, either.

But Mr Lee said measures could be rolled out if the high demand in the private-condominium market persists. "There could still be some spillover effects into the HDB resale market," he said.