More than 14,000 apply for 2,847 units; muted response to BTO launch

THE sale of ‘leftover’ Housing Board (HDB) flats – many in popular mature estates – has attracted an overwhelming response, with more than 14,000 potential home-buyers applying for them.

These 2,847 flats, called ‘balance flats’, are a mix of those left unselected from previous build-to-order (BTO) launches, surplus replacement flats under the Selective En Bloc Redevelopment Scheme, and those bought back by HDB.

And because so many people went for them, a parallel BTO exercise for new flats launched the same day has seen a muted response. Some BTO estates and flat types were even undersubscribed with just one day left to apply.

Applications for both exercises close today.

The HDB has always advised buyers to opt for BTO flats where possible because there are more of them for sale, increasing a buyer’s chance of successfully selecting a flat.

In BTO launches, 95 per cent of the flats are reserved for first-time buyers.

But this has not deterred potential home-owners from trying their luck at getting one of the balance flats, which are popular because they are often in mature estates which are more central in location. They also involve a shorter waiting time since some are completed and most others are already being built.

The balance flats in this exercise are scattered across 15 towns, including mature estates such as Queenstown and Bukit Merah, and non-mature estates such as Punggol and Woodlands.

Some are wildly popular. As of last night, the 30 four-room balance units being offered in Yishun had attracted 858 applications.

More than 1,800 applicants were vying for 422 three-, four- and five-room flats in Clementi, and there were almost 2,500 in the queue for 491 three- and four- room flats in Bukit Merah.

The balance flats were put up for sale last Thursday together with 5,415 BTO flats in Sengkang, Punggol, Jurong West, Jurong East and Ang Mo Kio in a bumper launch of sorts.

The BTO units range from 398.3 sq ft studio apartments with a starting price of $70,000 in Sengkang, to 1,205.5 sq ft five-room units costing from $375,000 in Punggol.

Balance flats cost from $82,000 for a two-room unit in Sengkang, to $611,000 for a five-room flat in Bukit Merah.

As of yesterday evening, there were only 7,200 applicants for the BTO units, with some three-room flats in Sengkang and Jurong East undersubscribed.

Property experts say the huge demand seen in this launch is partly due to last month’s revision of income eligibility rules, from $8,000 to $10,000, which has made more people eligible to buy flats.

‘The Sale of Balance Flats exercise was supposed to be the supporting cast and the BTO exercise the main star of the show. But the supporting cast has outshone the main star now,’ said property consultancy SLP International’s research head Nicholas Mak.

PropNex chief executive officer Mohamed Ismail said the response was within his expectations, but noted buyers must take responsibility for their own actions if they end up not getting a flat in this exercise.

‘Those who chose the Sale of Balance Flats know they are taking a chance, and those who were not distracted by the balance flats and chose BTO flats will be rewarded for it,’ he said.

‘As far as the ministry should be concerned, this launch will have helped over 8,200 people clear the queue.’

Banking executive Claude Lee, 24, is keeping his fingers crossed. He applied for a four-room balance unit in Sengkang, which was more than three times oversubscribed yesterday evening.

‘I knew the flats would be popular. You could say it’s a calculated risk,’ he said. ‘I decided to try my luck because the balance flat is still cheaper than a resale unit, and if I get it, I won’t have to wait as long as I would for a BTO.’

Balance flats are popular because they are often in mature estates. Some are completed and most others are already being built, so the waiting time is shorter. — ST PHOTO: ALPHONSUS CHERN

Source: Straits Times, 28th Sept 2011

Outlook for housing market is uncertain, making it hard for would-be home buyers and investors to decide

Home buyers, both occupiers and investors, have been scratching their heads more than usual lately on the vexing question of when to enter the market.

Even leaving aside the current global stock market and economic turmoil, it is a perplexing picture.

Will private home prices keep inching upwards, as they have done persistently even after the various market cooling measures brought in by the Government?

Or will the warnings of an oversupply of new homes, coming from certain quarters, prove to be accurate and lead to a sharp slide in prices?

Trying to evaluate the outlook for the local property market has been made even more baffling as a result of policy shifts on public housing, which have been thrown into the mix recently.

Prime Minister Lee Hsien Loong announced during his National Day Rally speech last week that the income ceiling for new build-to-order (BTO) HDB flats will be raised from $8,000 to $10,000, while that for executive condos (ECs) will go up from $10,000 to $12,000.

As a result, an additional 99,161 households will be eligible for BTO flats and an estimated 68,700 additional households for ECs, UOB Kay Hian property analyst Vikrant Pandey has calculated.

The pace of building will also be ramped up sharply, with 25,000 BTO flats to be launched both this year and next – an unprecedented 50,000 new HDB flats in total in just two years.

These changes in the public housing sphere are set to send ripples through the closely linked private market, shrinking the private demand pie especially for suburban mass market homes as middle-income buyers relook their choices.

Dr Chua Yang Liang, head of research at Jones Lang LaSalle South-east Asia, estimates a possible 5 per cent to 15 per cent decline in annual demand for new private housing, translating to 700 to 2,000 units.

This is provided public housing supply keeps pace with the increased demand by this group of new eligible buyers, he said.

The Government has also released a bumper supply of state land – largely in suburban areas – to try to stem rocketing prices in the private market.

This has led to concern about an oversupply in the next few years as the potential inventory builds up.

Coupled with a tighter immigration policy, demand could further slow.

This has sparked growing talk that suburban home demand will soften as prices head for a correction. This might cause home owners chagrin, but home hunters would welcome such a price slide.

More cooling measures unlikely

Some home buyers might be hoping for a fifth round of government measures – after the latest in January – to further cool the market and bring prices down.

However, experts say that this is unlikely for now, with the combination of growing macroeconomic uncertainties and the shadow of an oversupply of homes in the primary market.

Private home prices have also been moderating for seven consecutive quarters, inching up just 2 per cent in the recent April to June quarter.

In addition, land prices have come down at some recent government land sales tenders, indicating that the once bullish sentiment has become more subdued – although competition for good sites is still keen.

An RBS report by analysts Fera Wirawan and Bryan Lim said the measures to cool home prices seem to be concentrated on the HDB market. They also see lower policy risks now – in terms of a fresh round of cooling measures for private homes – in view of current global economic uncertainty.

‘In addition, potential measures to stem speculative demand in the private home market could have limited impact, given the highly punitive policy introduced earlier (in January),’ the report noted.

Where are prices headed?

Experts differ on where they see prices headed, with some predicting firm home prices in the light of low interest rates for the next two years and the strong holding power of developers and households.

Location also comes into play, with choicer sites – especially those close to MRT stations or transport nodes – expected to hold up better in the event of softening demand.

Those who expect prices to fall mostly see it happening in 2013 and 2014, as the construction of many suburban projects reaches completion.

Prices for the rest of this year are likely to hold firm, said Mr Joseph Tan, CB Richard Ellis (CBRE) executive director of residential.

But experts admit that the market outlook has been clouded by the global market volatility, the European sovereign debt crisis and risks of another global recession, with the United States economic recovery stalling.

How these events pan out in the next few months will have an impact on the take-up of new launches and where prices are headed, they predicted.

Goldman Sachs analyst Paul Lian said in a report released this month that he leans towards an oversupply of housing in 2013 to 2014 but is mindful of arguments made to the contrary.

‘At the very least, the quantum shift from undersupply to either balanced or oversupply is sufficient to take the edge off home prices,’ he noted. He expects prices to moderate by 15 per cent over the next 18 to 24 months.

SLP International research head Nicholas Mak sees a more than 50 per cent chance of a correction in the next three years. Whether this will be a short blip or sharp drop, however, depends on how the macroeconomic situation plays out.

RBS’ analysts, however, expect mass market homes to be in short supply till 2014 due to the population jump in the past five years and the lower-than-average home completions in the past decade.

The population rise over the past five years averaged 3.5 per cent a year compared to the 1.9 per cent a year growth from 1996 to 2005, they noted, driven by an increase in the number of non-Singaporeans.

‘Work permit holders who earn less than $1,800 per month accounted for the largest group of non-Singaporean citizens. This had heightened demand for mass residential homes and the segment would continue to be undersupplied until 2014,’ the report added.

When and what to buy?

This has thrown up the question of when buyers should make their move, in the light of the various factors and uncertainties in the market.

While home buyers often try to time the market, experts say that this is very difficult.

Affordability should be the key consideration instead.

Buyers also have to consider their motivations for purchase – budget, urgency of need and availability of what they like, for example – and the type of product they are looking for.

•Resale home or new launch

Mr Tan Kok Keong, OrangeTee’s head of research and consultancy, also said that buyers should be more cautious in purchasing new homes with benchmark prices as the downside risk for such units is greater during a downturn.

•Investment or owner occupation

‘If you can afford only a Japanese car, don’t go and buy a Mercedes,’ Mr Lim advised.

Source: Straits Times, 21st Aug 2011

Analysts say larger, combined launch deters panic buying

THREE buyers applied for every Build-To-Order (BTO) flat on offer when applications for the latest projects closed yesterday.

The 3,556 flats, originally slated to be offered over two exercises, were combined into one launch as part of National Development Minister Khaw Boon Wan’s move to provide more choices and lessen repeated disappointments for buyers.

As of 5pm yesterday, 11,548 applications were received for the seven projects in Sengkang, Tampines, Jurong West, Bukit Panjang and Yishun.

A range of units, from studio apartments to five-room flats, were on tap, at prices from $83,000 to $381,000.

With the exception of the studio apartments aimed at the elderly, 95 per cent of the supply is for first-time applicants who may find resale flats too pricey for them.

New flat costs are typically pegged to prevailing resale prices, but they are sold at a discount.

Resale flat prices climbed 2.9 per cent last quarter, according to official estimates, while data from real-estate firms indicate that cash premiums, paid on top of a flat’s valuation, had risen by as much as 50 per cent.

The huge release of 1,829 standard units in Sengkang – the most among all five areas – met with an equally enthusiastic response of 5,805 applications – about three per unit.

The small pocket of premium flats – 140 four-room units and 112 five-room types in Yishun – drew the most interest, with seven and six applications per flat respectively.

Least in demand were the 232 studio apartments in Jurong West, which drew 340 applications.

Flats under the standard contract come with minimal fittings, while the premium ones boast better quality finishes.

Dennis Wee Group director Chris Koh linked the strong demand for Yishun flats to the fact that the area has a strong transport system and facilities like Khoo Teck Puat Hospital.

‘Although the site is near the perimeter of Yishun, there haven’t been any new flats released there for a while so there is definitely pent-up demand,’ he said.

Mr Koh added that the downward trend of overall subscription rates showed that Mr Khaw’s move to have larger launches seemed to be working.

‘Smaller launches can create an artificial shortage because people might rush out to grab the few units on offer. Sold in bulk, it should deter panic buying,’ he added.

On Monday, Mr Khaw said he was monitoring the outcome of this exercise.

Referring to the previous launch in May, where 3,957 units garnered about four applications each, he said he was now assured that ‘quite a big number will have a chance to say ‘yes’.’

Saying a solution to BTO woes was within sight, he added that he planned to offer projects slated for August and September in a combined launch.

These could potentially yield more than 6,000 units in areas such as Ang Mo Kio, Jurong East, Jurong West, Punggol, Bedok and Sengkang, according to data culled from the Housing Board’s website.

The Housing Board has released about 15,500 BTO flats so far and plans to deliver 25,000 units by the end of the year.

To supplement supply, about 2,000 surplus flats will also be put up for sale.

Source: Straits Times, 21st July 2011

THE optimum flat-to-applicant ratio for public housing launches appears to be 1:2, with almost every applicant that is given a chance to pick a flat doing so.

In his latest blog entry titled Who Are The Successful Ones?, posted yesterday, National Development Minister Khaw Boon Wan gave an analysis of how earlier build-to-order (BTO) projects had done.

For the Housing Board’s January BTO launch, where there were two applicants for each of the 1,728 Bukit Batok and Yishun flats on offer, 92 per cent of all the applicants were offered a flat.

Mr Khaw, who took over the housing hot seat following the May General Elections, wrote: ‘For (the) January BTO, practically all first-timers got to select a flat. Even second-timers got an 84 per cent chance to select.’

This was taking into account how ‘not all who are asked to select (a flat) do so. Many will pass up the chance’, he said.

But the number of unhappy applicants for BTO flats, which form the lion’s share of public housing available, increased dramatically over the following two months.

For February, where there were five applicants for every flat, only 34 per cent actually got a chance to pick a flat, after taking into account those who turned down HDB’s offer to pick one of the 1,593 Sengkang and Bukit Panjang flats on sale.

March, with a whopping eight applicants for each of the 1,527 Jurong and Sengkang flats put up for sale, had just 19 per cent of the applicants getting a chance to pick a flat.

Those who had turned down a previous offer fared particularly badly in those months, with 13 per cent and 4 per cent in February and March respectively getting offered a flat, Mr Khaw noted.

This, he said, is ‘why we are ramping up BTO launches to reduce application rate, and hence raise the chances for our applicants’.

Data from the later months, including May’s unprecedented launch of 4,000 new flats, as well as last week’s launch of 3,600 flats at a significant discount from earlier new flat prices, are not yet available.

Mr Khaw also disclosed the proportion of applicants who turned down a chance to pick a flat.

His conclusion: ‘Applicants to choice BTO launches are more likely to say ‘yes’. Applicants who have been unsuccessful earlier are more likely to say ‘yes’ too.’

Applicants who had applied for, but had so far failed to be offered the chance to pick a flat, for instance, were significantly more likely to grab the opportunity when it finally appeared.

There were, however, some applicants who appeared stubbornly picky.

Some 60 per cent of the January applicants who had already turned down the offer to select a flat at least once previously turned up their noses when offered another bite at the public housing cherry.

By comparison, only 42 per cent of first-timers rejected the offer of a flat during the same period.

Mr Khaw ended his post by pledging to ‘offer larger BTO launches’.

‘This way,’ he wrote, ‘we hope to provide more choices and reduce the odds of repeated disappointment’.

This year, he had said in an earlier blog post, the HDB will offer a record 26,000 new flats, up from an earlier estimate of 22,000 units. The agency has, to date, already launched about 16,000 flats.

Source: Straits Times, 18th July 2011

Khaw’s Facebook post comes in response to complaint about prices

High asking prices for Centrale 8, a Design, Build and Sell Scheme project, have sparked an outcry. DBSS lets private developers participate in the public housing market. — ST PHOTO: CHEW SENG KIM

THE sale of land for Design, Build and Sell Scheme (DBSS) projects has been put on hold while the Government carries out a review, said National Development Minister Khaw Boon Wan.

But developers which clinched sites last year will launch their projects as scheduled in the next few months, he added, noting that ‘these are old tenders beyond my control’.

Mr Khaw made these points on his official Facebook page over the weekend, in response to a member of the public who called for the scheme to be scrapped in the wake of high asking prices at a Tampines project called Centrale 8.

The developer, Sim Lian Group, initially estimated prices at $880,000 for five-room units, later revising them to $778,000 after a public uproar.

Yesterday, the Ministry of National Development (MND) said that pending the results of the review, the Housing Board would not proceed with the sale of a DBSS site in Bendemeer slated for later this month.

Checks with HDB’s site revealed that the sale of a site in Sengkang – expected to yield 790 units – is still ongoing, with a July 20 deadline.

DBSS was rolled out six years ago to give private developers a chance to participate in the public housing market and to introduce more building and design innovations in such housing.

Since then, 13 sites have been awarded and 5,500 flats have been built and sold.

DBSS flats make up less than 1 per cent of the total HDB stock.

Analysts say the current review is timely, given the changing housing landscape. Recent flash estimates from HDB revealed that resale flat prices jumped 2.9 per cent from the first quarter of this year, while data from major real-estate firms put the median cash premium paid above a flat’s valuation at about $30,000, an almost 50 per cent increase.

PropNex chief executive Mohamed Ismail noted that when DBSS kicked off in 2005, the market was in the doldrums and there was a surplus of public housing.

‘The scenario now has changed with soaring prices,’ he said, adding that DBSS flats are in demand because most are in mature estates or central locations.

Mr Colin Tan, Chesterton Suntec International’s research and consultancy director, said that if the objectives are to inject variety and engage the private sector and smaller contractors, ‘then perhaps the sites should be in newer towns which are less in demand’.

Dennis Wee Group director Dennis Wee said that if a revision of the monthly household income cap is being studied for public housing, then it makes sense to put DBSS on hold.

‘Moreover, eligible flat buyers for these units are a smaller group compared with the main supply,’ he said.

Currently, the income ceiling for build-to-order (BTO) flats is up to $8,000, while that for DBSS and executive condominiums is up to $10,000.

Meanwhile, DBSS developers with projects in the pipeline say it is business as usual for them.

The launch of the 488-unit Belvia in Bedok is still on track to take place this year, said a spokesman for CEL Development.

‘We’ve already submitted the necessary documents; the prices have yet to be confirmed and will depend on prevailing market prices then,’ she said.

Mr Lim Yew Soon, managing director of EL Development, which clinched a DBSS plot in Clementi in March, said it would be to its advantage to ‘sell flats as soon as possible to ease cashflow’.

Although he expects the top price to cross $800,000, it would not hit the peaks that sparked the Centrale 8 furore.

Source: Straits Times, 5th July 2011

They think location will get them top dollar for units, and experts agree

Some DBSS residents have found the workmanship of their units not up to expectations. For example, Mr Wei Xiaodong, 31, seen here in the master bedroom of his DBSS unit at The Premiere@Tampines, found a door infested with termites about a year after moving in. — ST PHOTO: LIM WUI LIANG

THEY may have paid high prices, but residents of Design, Build and Sell Scheme (DBSS) flats said they are confident that the better location of their estates will land them good resale prices in future.

Industry observers and academics agree that it is the location – and not so much the touted better fittings and design – that could help the owners command a premium in the resale market.

DBSS flats have been in the news after the developer of the Centrale 8 project in Tampines drew flak for pricing units at high prices.

PropNex chief Mohamed Ismail said: ‘Today, it is a DBSS flat, but five years from today, it will be another ordinary HDB flat. The valuation then will focus on the good location of the flats and the market sentiment.’

Agreeing, SLP International head of research Nicholas Mak said: ‘No one knows what the market will look like in five years’ time.’

Associate Professor Yu Shi Ming, who heads the department of real estate at the National University of Singapore, said the distinction between a DBSS flat and a Build-To-Order (BTO) one will narrow when both enter the resale market in years to come.

‘Resale prices rely on market supply and demand. There is no guarantee the premium for DBSS flats will remain in future. Even today, the BTO flats are well-designed and their interior designs are not bad,’ he added.

Since 2005, HDB has sold land for 12 DBSS projects.

Eight of them, the latest being Centrale 8 in Tampines, have been launched for sale.

Under the DBSS scheme, private developers tender for the land and decide on matters such as design and pricing.

But buyers for the 99-year leasehold flats still have to meet HDB’s eligibility rules. They can sell the units only after they have lived there for five years.

For now, residents who have moved into DBSS projects are more than happy to enjoy their new homes.

Take the case of Ms Sharon Wu, 40, who lives in a 39th-floor five-room unit in City View@Boon Keng.

‘We paid a lot for the flat in 2008, but it was for the location and the million-dollar view,’ said the project manager who enjoys views of not just the Singapore Flyer and Central Business District, but parts of Batam Island too.

She expects the value of her flat – it was $722,000 when she and her husband bought it – to increase to as much as $1 million when it can go on the resale market.

Similarly, Ms Oo Ying Ying, 32, a systems analyst who owns a five-room unit at The Premiere@Tampines, feels that the location is the main selling point.

She and her husband paid $390,000 for the unit, which is near her parents’, and in an area marked for development.

‘We were eyeing the location anyway, so even though the furnishings were a tad disappointing, it didn’t matter to us,’ said Ms Oo, who moved in in early 2009.

Another resident of The Premiere, Mr Francis Ng, 44, spent a further $40,000 on renovations because he was not happy with the workmanship of the fittings. He said he can recoup more than what he had paid.

‘The value of property in this area has doubled in the last few years, and I think it will continue to rise. I think I will start renting the flat out in a few years – it is a good piece of investment I wish to hold on to,’ said Mr Ng, who is self-employed and works in the marine industry.

Other DBSS residents have also found the workmanship of their units not up to their expectations.

Retiree Poh Seng Tuck, 59, who lives at The Premiere, found the floor of his balcony missing a tile when he first inspected the apartment, in addition to small cracks in the wall and loose window handles. ‘The missing tile was so glaring, I’m not sure how anyone could have failed to notice it,’ he said.

Mr Wei Xiaodong, 31, a product analyst who lives in the same block, found termites in one of his bedroom doors about a year after moving in.

‘I contacted a pest-control company, and they told me I had to change the entire door. They said the door was probably infested with the termites from the beginning, as there was no way they would have come into the picture halfway,’ he said.

Early this year, when people started moving into City View@Boon Keng, many found that their water heaters were not working properly.

The paint on the walls of some of the units was also peeling.

Its developer, Hoi Hup Realty, said it is replacing all the faulty water heaters and is working with residents to resolve any complaints over defects.

Source: Straits Times, 25th June 2011

Five-room units drop from $880,000 to $778,000 now

DEVELOPER Sim Lian Group has slashed the prices of its Design, Build and Sell Scheme (DBSS) flats at Centrale 8 in Tampines by up to $102,000.

The move follows the public outcry at the record prices of the designer Housing Board (HDB) units launched last Thursday, when the developer asked $880,000 for the biggest five-room flats.

Outraged buyers complained to the Ministry of National Development (MND) and minister Khaw Boon Wan, who on Saturday wrote in his blog that consumers who thought the prices too high should give the flats a miss.

Others accused Sim Lian of profiteering, pointing out that while it did not pay a record sum for the land for Centrale 8, it priced the project at record prices of up to $750 per sq ft (psf).

They wanted MND to tell the developer to lower the prices, something the ministry said it could not do because under the DBSS, developers are free to set prices for the finished flats.

Sim Lian’s announcement last night that it would cut Centrale 8 prices came hours after the ministry said in a letter to The Straits Times Forum Page that it would be reviewing the DBSS as part of its overall review of housing policies.

Last night, Sim Lian released what it called the ‘confirmed price range’ of its Centrale 8 units.

Three-room units now cost up to $445,000, down from $510,000. Four-room ones now cost a maximum of $592,000, down from $683,000. And five-room units will now cost up to $778,000, or $663 psf.

The price cuts still keep its five-room units at a record high for DBSS launches, but much closer to the maximum of around $720,000 for five-room flats at previous DBSS launches like The Peak@Toa Payoh and City View@Boon Keng, and $739,000 at Bishan’s Natura Loft.

Sim Lian said it arrived at the new prices by taking into account resale prices of HDB flats in the area, the prevailing economic conditions and proximity to the transport network, good public facilities and other amenities.

It also commented on the backlash from the public since it released the initial prices of its units.

‘It is regrettable that during the application period, the media and members of the public did not take note of our repeated public emphasis that the price range which we had announced was only an indicative price range, and would not be the final sale prices for the respective types of flat units,’ said the statement.

It is the first developer to date to cite ‘indicative prices’ for a DBSS launch, only to lower them by so much within a week.

Sim Lian Group was the first private company to work with the HDB in 2005 on the pilot DBSS project, The Premiere, also in Tampines.

The Singapore Exchange-listed company’s core businesses are construction and property, and its construction arm has been doing contracts for HDB flats for more than 30 years.

The hefty discounts took industry watchers by surprise. Some asked how Sim Lian could have arrived at its original indicative price range, if confirmed prices eventually turned out so much lower.

Said SLP International head of research Nicholas Mak: ‘It is a sign that they are bowing to public pressure. It is a lesson to the other developers when it comes to pricing their own products.’

Said PropNex chief executive officer Mohamed Ismail: ‘Definitely, I think that Sim Lian’s reduction of the price is demonstrative of the fact that people are not prepared to pay such high prices for the flats, whether they are the intended sale prices or not.’

Indeed, MND warned in its letter to the Forum Page that DBSS developers which overprice their flats risk getting a poor response from buyers.

DBSS flats were first introduced in 2005 to offer more choices and variety to meet the demands of higher-income flat buyers.

Since then, 5,500 DBSS flats have been built and sold, or 916 units a year.

In comparison, HDB has launched more than 60,000 Build-to-Order (BTO) flats since the BTO scheme was introduced in 2001, which works out to about 6,300 units launched every year.

Source: Straits Times, 22nd June 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

However, no indication has been given on when this might happen, what the ceiling might be raised to or if the ceiling for design, build and sell scheme (DBSS) flats and executive condos will be affected.

Yet, developers say, they have to figure out a way to price these uncertainties into their land tenders.

Some are also uneasy about the time lag between when Mr Khaw’s thoughts are published online and an actual policy shift. Small- to mid-sized companies that lack deep pockets are more concerned.

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

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

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

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

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

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

Source: Straits Times, 22nd June 2011

99-year Woodlands plot attracts just three bids as HDB releases more land

A RESIDENTIAL site for private homes in Woodlands has fetched a top bid of $152 million in a subdued three-cornered contest among developers.

This came as the Housing Board kept up its drive to boost flat offerings this year by releasing a new site for design, build and sell scheme (DBSS) flats yesterday.

Experts say a move to lift the number of build-to-order HDB flats launched this year to 25,000 would have weighed on developers’ minds as it could siphon demand away from the private market.

The lukewarm interest from developers, however, was due more to the site’s ‘average’ attributes, they added.

A joint venture between Fragrance Group and Aspial Corp put in the top bid for the site at the junction of Woodlands Avenue 2 and Rosewood Drive. The bid worked out to $367 per sq ft (psf) per plot ratio (ppr).

They said in a statement that, if awarded the site, Fragrance will hold a 60 per cent stake in a special purpose vehicle while Aspial will hold the remaining 40 per cent to jointly develop the project.

Second-placed Far East Organization and Sekisui House were just 1 per cent behind with a bid of $150 million – or $363 psf ppr. EL Development was third with a $120 million bid, or $291 psf ppr.

The 99-year leasehold land parcel has a maximum gross floor area of 38,333 sq m and can accommodate a five-storey condo with about 390 units.

Ms Chia Siew Chuin, director of research and advisory at Colliers International, said competition from existing and upcoming projects in the vicinity could have contributed to the tepid response. These include the newly completed Rosewood Suites as well as Far East Organization’s new project Woodhaven at the junction of Woodlands Avenue 1 and Rosewood Drive.

Mr Ong Teck Hui, Credo Real Estate’s head of research and consultancy, noted that the site’s top bid is still 10 per cent higher than that for Far East’s site – which was tendered with a winning bid of $333 psf ppr in November last year – suggesting firm suburban residential land prices.

CB Richard Ellis (CBRE) Research executive director Li Hiaw Ho expects the new project to break even at $700 to $730 psf while Colliers’ Ms Chia expects the units to sell at about $780 to $800 psf.

‘Sub-sales of units in Rosewood Suites were transacted at between $730 psf and $810 psf in the March to May period this year,’ Mr Li said.

The HDB yesterday launched the sale of a site at the junction of Fernvale Link and Sengkang West Avenue. The 22,706 sq m site can yield about 790 flats.

HDB said it will launch another DBSS site at Bendemeer Road with about 700 units later this month.

PropNex corporate communications manager Adam Tan expects the latest site to be sold for $650 to $750 psf ppr.

The site is likely to be popular with developers and buyers as Sengkang is a rapidly maturing estate with shopping centres and established schools nearby, he added. ‘In particular, DBSS flats will present the sandwich group with increased housing options, which will also help ease the demand for public housing as the sandwich group does not have to compete with households earning less than $8,000 for resale flats.’

Separately, another development, Olina Lodge at Holland Hill, launched its collective sale with an indicative price of $225 million yesterday. This works out to $1,575 psf ppr for the freehold site of 7,831 sq m, inclusive of a 10 per cent balcony allocation. Marketing agent DTZ said the 67-unit, four-storey walk-up property can be redeveloped into a 12-storey project with a gross floor area of 134,862 sq ft, according to the 2008 Master Plan.

Owners are expected to get about $2.95 million to $4.9 million each in proceeds – some 65 per cent more than their units’ existing value, DTZ added.

Source: Straits Times, 8th June 2011

Khaw asks HDB to look into releasing unsold units; it could boost total to 26,000 this year

EVEN as the latest offer of 3,957 Build-To-Order (BTO) flats drew to a close yesterday, National Development Minister Khaw Boon Wan announced yet another infusion to ramp up supply.

He has asked the Housing Board to look into releasing 1,000 unsold units from earlier sale exercises later this year.

Just last week, he raised the total number of flats on offer this year from 22,000 to 25,000, in a bid to help more young couples own homes as soon as possible.

With the 1,000 now set to be added from the Sale of Balance Flats (SBF) exercise, Singaporeans are looking at a total of 26,000 units to choose from for the whole of this year.

In his latest blog posting titled Within Expectation, Mr Khaw noted that application rates for the latest BTO were ‘good and within expectation’.

The six BTO projects, which will be built only after eligible buyers register sufficient interest, are located across four towns – Pasir Ris, Punggol West, Tampines and Woodlands.

This was the largest supply of BTO flats in a single launch, surpassing the 3,185 units offered previously.

As of yesterday, more than 13,000 people had applied for the flats, or more than three applications per unit.

Most in demand were five-room flats in the mature estate of Tampines, which was oversubscribed by seven times. The 320 units measuring about 1,200 sq ft cost between $371,000 and $444,000.

Two-room flats in Pasir Ris drew the least interest, said the HDB. The 257 flats only garnered 76 applications. These 500 sq ft units cost between $120,000 and $143,000.

Mr Khaw noted that if the application rates for projects in Tampines were excluded, the overall application rate was about two and a half times.

He said that HDB will try to get the flats completed as soon as possible.

With this latest launch, HDB has offered about 12,000 units this year, leaving another 13,000 units to be launched in the next seven months.

These launches would average about 1,800 units.

For the June BTO currently being prepared, HDB is looking to launch about 2,100 flats in Bukit Panjang and Sengkang, said Mr Khaw.

Market watchers said yesterday’s results were expected.

ERA Realty’s key executive officer Eugene Lim said: ‘Tampines is an older estate and an established one, which means more parents living there. Hence the demand as their children get their own homes.’

Source: Straits Times, 3rd June 2011