Complete Property Market Updates of Singapore

I REFER to Monday’s letter, ‘New HDB flats priced too high’ by Mr Ho Koon Woei.

In pricing new HDB flats, the Housing Board’s main consideration is the prevailing market condition at the time of offer. Resale HDB prices have climbed in the past two to three years, in tandem with the overall upturn in the property market. Notwithstanding these increases, all new HDB flats are priced below their equivalent market prices, so buyers enjoy a generous housing subsidy.

The HDB also takes into consideration flat attributes such as location and design enhancements in pricing new flats. The $329,000 to $396,000 price range of the five-room flats in Punggol Sapphire reflects their superior design standards and prime location, and is net of the market subsidy given by the Government. Similar flats in Punggol go for about $375,000 to $430,000 in the resale market.

From the figures cited by Mr Ho, he is likely to be comparing flats under the recent Build-To-Order (BTO) launch in Punggol, with unsold flats re-offered in 2005 and 2006 under the Walk-In-Selection (WIS) for Punggol. The flats offered under WIS were balance units from earlier BTO projects. They might have less favourable attributes such as low floor units and those located further away from the town centre or MRT. In contrast, Punggol Sapphire is a premium project sited near Punggol Town Centre and MRT station. It comes with enhanced architectural designs, landscaping and better internal finishes. Most of the flats are also provided with features such as green balconies, planters and bay windows.

The HDB is committed to providing affordable public housing to Singaporeans, and will continue to offer a variety of flats of different sizes and designs in various locations to meet the diverse housing needs of its flat buyers.

Kee Lay Cheng (Ms)
Deputy Director (Marketing and Projects)
for Director (Estate Administration and Property)
Housing and Development Board

Source : Straits Times - 7 Jun 2008

HDB’s two new projects still oversubscribed but at half the level seen before change of rules

IT LOOKS like the time-wasters have got the message after the Housing Board tightened rules for flat applications.

The launch of 1,485 premium flats in Punggol and Sengkang closed on Wednesday with 4,050 applications - still oversubscribed but at about half the level seen before the new rules kicked in.

Some sales launches had become free-for-alls, with thousands of people who had no real intention of buying still lodging applications just to keep options open.

This was evident in the actual take-up rate for flats, which was sharply lower than the number of applicants.

Apart from creating an administrative headache for the HDB, such frivolous applicants also meant deserving buyers were pushed further back in the queue.

Now, a first-timer who twice rejects an offer to buy a flat at a build-to-order (BTO) or balloting sales exercise will lose his first-timer priorities for a year.

In other words, he will be sent to the back of the queue with the second-timers.

The shake-up has certainly made first-time buyers like Ms Lynne Huang, a 25-year-old teacher, more cautious.

‘The new rule is quite harsh, so home buyers like me really have to think twice before applying for any project,’ she said.

‘If I apply, it’s likely that I will buy a unit unless it’s on a very low floor.’

The amended regulations have raised fears that buyers offered leftover flats would be penalised, but the HDB has said it could be flexible if applicants at the back of the queue have good reasons for rejecting available homes.

HDB’s new rules had their first try-out in two new projects - Compassvale Pearl in Sengkang and Punggol Sapphire.

They were offered under the BTO system where flats are built once a certain level of demand is reached.

Compassvale Pearl received 977 applications for the 420 flats on offer, and Punggol Sapphire attracted 3,073 bids for 1,065 flats.

That put the ratio of applications to flats at 2.3 in Compassvale Pearl and 2.9 in Punggol Sapphire - roughly half the figure for projects launched earlier this year.

Applications for the Punggol Spring sale in February and Jade Spring @ Yishun Phase 2 in March were about five times the number of flats offered - or five would-be buyers for every home.

Punggol Spring received 2,765 applications for 494 flats, and Jade Spring @ Yishun Phase2 had 2,828 bidders for 576 flats, the HDB told The Straits Times.

Housing experts had anticipated the dip in applications following the rule change, but they still expect the take-up rate to remain strong due to real demand in the market.

PropNex chief executive Mohamed Ismail said buyers are now showing discretion in their applications.

‘But I think the more interesting thing to watch is the actual take-up rate, if demand continues to meet the supply,’ he said.

Mr Colin Tan, head of research and consultancy at Chesterton International, believes there is ‘a lot of pent-up demand’ in the market and it was likely the HDB could even see higher take-up rates from more serious buyers.

In the second half of last year, buyers took up about 54 to 72 per cent of flats in new HDB projects in Punggol, Sengkang and Bukit Panjang.

Unsold stock has reached an all-time low of 1,200 flats - a stark contrast to the 25,000 unsold flats at its peak.

HDB is ramping up supply to about 8,400 units this year - 40 per cent more than last year’s new supply.

Source : Straits Times - 6 Jun 2008

WE WOULD like to thank Ms Tan Ai Li, Mr Adrian Bek, Mr Chua Chern Pin and Mr Adry Zamani for their comments and feedback on HDB’s new application process (May 24 and 28).

In recent sales exercises, HDB had seen significant over-subscription for new flats. However, some of the applicants did not book a flat when their turn was due, resulting in many flats being left unsold at the end of the exercises.

Many of such applicants had applied repeatedly for new flats in numerous sale exercises but declined to make a booking when called up. Processing their applications diverts HDB’s time and resources away from those with more urgent housing needs. HDB has, therefore, revised the application process to reduce the repeated non-selection of HDB flats in sales exercises.

In revising the flat application process, HDB analysed feedback from applicants who did not select a flat when their turn was due. Many of them indicated that the flat of their choice was not available, that they wanted to participate in other HDB sales exercises or switch to buying resale flats, or were not financially ready. This was despite HDB making available beforehand information such as the location, design, estimated completion dates and price ranges for flat buyers’ consideration.

The revised application process will encourage applicants to think through their housing plans and options carefully before they apply for a flat. Those with specific flat requirements in mind can also consider resale flats where a CPF Housing Grant of $30,000 to $40,000 is available for eligible flat buyers.

HDB will continue to monitor and review the flat application process regularly to meet the needs of HDB flat buyers.

Kee Lay Cheng (Ms)
Deputy Director (Marketing and Projects)
for Director (Estate Administration and Property)
Housing and Development Board

Source : Straits Times - 6 Jun 2008

THE Housing and Development Board (HDB) is clamping down harder on the abuse of its heavily subsidised rental flats.

Enforcement blitzes to identify illegally rented flats will be stepped up and they will be extended across a wider area of the country, said the HDB yesterday.

Its response comes amid growing disquiet on several fronts about the abuse of subsidised rental housing.

MPs, residents of rental blocks and eligible Singaporeans who feel they have been left in the queue while foreign workers snap up cheap flats have all called for action.

The Straits Times reported last week that an increasing number of tenants have been illegally subletting HDB flats to cash in on the demand for low-priced accommodation. The flats are often leased to workers from Malaysia, China and India who are either in the dark about rules or just want the cheapest rental option.

Some MPs told The Straits Times that residents had alerted them to the illegal rentals and demanded more enforcement.

‘There should be more thorough checks,’ said Aljunied GRC MP Cynthia Phua. ‘Subsidised housing should be given to deserving families. People who do not need it should let it go.’

HDB rental flats have soared in demand over the past year, with the waiting list up by at least 30 per cent in recent months. There are about 4,000 applicants in the queue with a waiting time of 15 months - double the wait in 2006.

Ms Lee Bee Wah, an Ang Mo Kio GRC MP, frequently gets appeals from Singaporeans who are eligible for rental flats but have been stuck in the queue for several months.

The issues concerning rental flats have been raised in Parliament before. National Development Minister Mah Bow Tan said in a February session that HDB will increase its supply of 42,000 flats by 20 per cent. It is also reviewing its eligibility scheme.

He also said then that enforcement will be carried out to ‘weed out those who do not need or have abused the privilege of a rental flat’.

HDB has stepped up enforcement efforts and extended blitzes to areas such as Jalan Minyak, Telok Blangah, Jalan Bukit Merah, Kallang- Whampoa, Mei Ling Street and Clementi this year. These are on top of annual inspections ‘to ensure the tenancy of the flat is in order’.

Tenants illegally renting out their home can lose the flat and face a five-year ban from renting or buying HDB property.

As of April, HDB had recovered 131 flats since 2005.

An MP for Pasir Ris-Punggol GRC, Mr Teo Ser Luck, said the community could also be roped in to help. ‘There is a greater demand for rental flats and we need everyone’s help to highlight errant cases,’ he said.

HDB said that about 30 per cent of the cases of illegal renting uncovered stemmed from residents’ feedback.

North West District Mayor Teo Ho Pin, who is also MP for Bukit Panjang, said the problem goes beyond housing demand and touches on the lack of cheap, adequate housing for foreign workers.

‘We need to quickly provide solutions to house the foreign workers,’ said Dr Teo, so as not to crowd out needy Singaporeans.

Retiree Amy Tan Ai Bee, 75, is one such Singaporean. She has spent 14 months in the queue: ‘I think it’s really unfair that I waited for such a long time, yet there are people who are renting their flats out for a profit. I hope this can be addressed soon.’

Source : Sraits Times - 5 Jun 2008

SIM Lian Land Pte Ltd yesterday emerged as the top bidder in a Housing & Development Board (HDB) tender for a Design, Build and Sell Scheme (DBSS) site at Simei Road.

The $52 million bid, or $137 per square foot per plot ratio (psf ppr), was at the lower range of earlier market expectations. Industry observers projected in April that the site could fetch between $49 million and $76 million, or $130 to $200 psf ppr.

The fifth DBSS site, with a lease term of 103 years and a maximum allowable gross floor area of 380,300 sq ft, attracted another bid from AMK Development Pte Ltd. Its bid of $37.3 million, or $98 psf ppr, was 28 per cent lower than Sim Lian Land’s.

Managing director of Sim Lian Land Kuik Sing Beng told BT that the site is expected to yield about 340 units. Five-room flats would make up 60 to 70 per cent of the units, and the rest would be a mix of four- and three-room flats. Sim Lian Land plans to launch the units for sale next May.

Mr Kuik also said that the breakeven cost would be about $350 psf of sellable area. He noted that the selling price for resale flats in the Simei area is about $380 psf of sellable area.

Cushman & Wakefield managing director Donald Han believes that HDB is likely to award the site. He observed that in spite of the gap between the two bids, Sim Lian Land’s bid is in line with current market expectations.

According to Mr Han, the small number of bids reflects the cautious attitude that developers have adopted. Rising construction costs are also posing a challenge for developers, Mr Han pointed out. Echoing this, Mr Kuik said that construction costs have increased substantially in the past one year.

HDB is expected to make a decision in the next two weeks.

Source : Business Times - 4 Jun 2008

I READ with interest news on the Housing Board website on the new build-to-order (BTO) projects launched in Punggol and Sengkang.

However, I am astounded by the high prices of the four- and five-room flats. The five-room premium flats in the Punggol Sapphire BTO project are selling at between $330,000 and $400,000. These prices are comparable to the new flats on sale in mature estates just two years ago.

They cost almost $100,000 more, or an almost 50per cent jump, than similar flats in Punggol just two to three years ago.

By pricing the units so high, is HDB not further stoking the inflationary trend of home prices?

Source : Straits Times - 2 June 2008

Moderate 4-10% growth seen for 2008: Knight Frank

THE rate of price increase of Housing and Development Board (HDB) resale flats will further decelerate in the next six to nine months, resulting in a relatively moderate 4-10 per cent growth for the whole of 2008.

Knight Frank director (research and consultancy) Nicholas Mak added: ‘If the local economy were to slip into a recession in 2008, overall prices of HDB resale flats could vary between a 2 per cent contraction and a 3 per cent growth for the year.’

Knight Frank’s projections are based on HDB’s resale price index, which increased in Q1′08 by 3.7 per cent over the previous quarter. But Mr Mak explained that price movements in the resale market are difficult to project because data on average valuations are not available even if median prices, which is likely to include cash-over-valuation (COV), is.

As such, Mr Mak expected that median COV of all resale flats, which fell to $21,000 in Q1′08 from $22,000 in Q4′08, could continue to fall this year.

Another possible cause for lament is that potential HDB upgraders - a significant factor in private mass market housing - could disappear in sync with falling HDB resale transactions.

In Q1′08, transactions fell about 6 per cent to 6,358 units from 6,748 units in Q4′07.

Knight Frank also believed that HDB upgraders have been supporting the private secondary market, which saw 3,521 units transacted in Q4′07.

While it did not have precise numbers of HDB upgraders buying into the secondary market, it noted that in Q4′07, the greatest number of private secondary market transactions occurred in the Outside the Central Region (OCR), and was ‘attributable to the HDB upgraders bracket’.

And Knight Frank believed that there could be an emerging resistance to swelling home prices.

In January, Knight Frank noted that City View @ Boon Keng, under HDB’s Design, Build and Sell Scheme (DBSS), pushed prices to $727,000 for a five-room unit. While the launch generated a lot of buzz, at end March 2008, 250 of the 714 flats available were still unsold.

‘The issue that arises is the validity of the pricing of such DBSS flats. Keeping in mind that there are more of such developments proposed in places like Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok, and given that they are still bound by public housing rules such as the income ceiling of buyers, one could begin to wonder about the intrinsic affordability of public housing initiatives,’ Mr Mak said.

Source : Business Times - 30 May 2008

Heavily subsidised HDB units, which are much in demand, are often sub-let to foreigners

SOME tenants in heavily subsidised HDB rental flats have been illegally sub-letting their homes to cash in on surging demand for cheap accommodation.

There are no official figures but tenants in some estates say that as many as one in five rental flats is rented out to foreign workers - a clear breach of HDB rules.

The flats are often leased to workers from Malaysia, China and India - who are either unaware that they are renting illegally or do so because the units are the cheapest option.

Property agents and tenants told The Straits Times that there is an increasing number of such flats put up for rent by people keen to cash in on foreign workers’ demand for cheap housing.

A Malaysian, who declined to be named, told The Straits Times that she leases a two-room HDB rental flat in Toa Payoh with a friend for $700 a month.

That could be as much as $650 more than the subsidised rent - a tidy profit for the original tenant.

Their ‘landlord’ told them to keep windows shut and not to answer the door. The 35-year-old said she knew the deal was illegal but she was ‘desperate for cheap housing’, adding in Mandarin that ‘If I didn’t rent this flat, I can’t afford anything else’.

The abuse of HDB rental flats comes amid soaring demand for such homes, which are meant for needy Singaporean families.

The waiting list has shot up by at least 30 per cent over the past few months, with about 4,000 applicants in the queue. This translates to a 15-month wait, which is double the time in 2006.

Eligible Singaporeans can apply for HDB rental flats and pay $26 to $205 for a one-roomer and $44 to $275 for a two-roomer, depending on household income and other factors. The HDB manages about 43,000 such flats and plans to add 20 per cent more.

A Member of Parliament for Ang Mo Kio GRC, Ms Lee Bee Wah, told The Straits Times that residents had complained about the problem when she visited Teck Ghee last month.

‘People tell me their neighbours are renting their flats out. They should not be hogging the flats if they have an alternative place to stay,’ said Ms Lee.

When The Straits Times called five property agents last week, four said they had one- and two-room flats available for rent. Most of these flats would be rental units, said HDB.

And it is not just low-paid foreign workers renting such flats.

A Singapore permanent resident from Malaysia said he used to rent such flats as they were the cheapest on the market.

The 28-year-old finance executive rented a two-room subsidised flat in Owen Road for $550 in 2006. A similar unit on the open market would cost at least $1,000. Now, government-subsidised flats can fetch $1,000 in good locations, he added.

When The Straits Times visited Toa Payoh rental blocks last week, some tenants said they noticed an increasing number of workers from China and Bangladesh living in their blocks.

Coffeeshop worker Poh Lee Tee, 45, said her neighbour frequently rented out his flat to Indian workers, who kept her up when they came home from work.

‘But I don’t want to report my neighbours, in case I get into trouble,’ said Madam Poh.

Mr Wu Mu Song, 74, who has lived in one of the rental blocks for the past 30 years, estimated that two out of 10 flats are rented out illegally. ‘This is unfair; there are others who need these flats more,’ he said in Mandarin.

Although abuse of rental units is on the rise, Mr Wu said it was hard to catch illegal tenants as they often ignore visitors - including HDB officers.

Tenants illegally renting out their home can lose the flat and face a five-year ban from renting or buying HDB property.

The HDB recovered 17 flats in 2005 and 27 last year. The increase was due ‘to better public awareness and feedback’, it said.

It also conducts inspections at least once a year and carries out regular ‘enforcement blitzes’.

One blitz recovered 57 rental flats in three months in 2003 and 35 in a crackdown that began last year in areas like Tampines, Ang Mo Kio, Toa Payoh and Bukit Merah.

Anyone aware of illegal renting can contact the HDB at flw1@hdb.gov.sg. or call 6490 2410.

Source : Straits Times - 29 May 2008

Blk 63 TOA PAYOH LORONG 5

When The Straits Times visited this HDB rental block last week, we identified one unit where voices in a heavy Chinese accent could be heard. The windows were shut, save for a panel at the top where we could see a light and a suitcase. When we knocked on the door, the voices fell silent and, even after repeated knocks, nobody answered the door.

HDB also cited two recent case studies of tenants illegally sub-letting their rental flats.

Blk 3 JALAN BUKIT MERAH

A one-room flat at Block 3, Jalan Bukit Merah, was leased by the HDB to the tenant and her two children. An inspection in January revealed that the flat was sub-let to five Chinese nationals at a monthly rental of $900. The tenant was working in Malaysia while her two children were living with relatives.

Blk 805 KING GEORGE’S AVE

A two-room rental flat was leased to the tenant and his two children. An inspection by HDB revealed that the flat was sub-let to Chinese nationals for $800 per month. The tenant and his family were living with his mother at Chai Chee.

In the latter two cases, the units were recovered in January and February, and the tenants banned from renting HDB flats for five years.
 
What’s the penalty?

Tenants who illegally sub-let their flats will have their units recovered by HDB, and banned from buying or renting a flat from HDB for five years, while any unauthorised occupier (above 18 years old) will be barred for 2-1/2 years.

Source : Straits Times - 29 May 2008

THE Housing and Development Board (HDB) should be stricter on frivolous applicants for its new flats (’HDB targets frivolous applicants”, last Friday).

The HDB should also allow singles over 35 years of age to apply for flats rejected by successful applicants. Single Singaporeans will probably not be as fussy as the others.

Currently, singles are limited in their choices when buying an HDB flat.

Allowing single Singaporeans the chance to buy rejected flats may also ensure that such flats are not left vacant for years, flats such as those in Jurong West, Punggol and Sengkang.

Source : Straits Times - 28 May 2008