HOME-buyers can look forward to an unprecedented surge in supply of new Housing Board (HDB) flats this year and next – enough to fill a town as big as Toa Payoh.

The HDB said yesterday it will offer 16,000 new flats this year, and up to 22,000 next year under its build-to-order (BTO) scheme. Taken together, the number surpasses the 35,400 flats in Toa Payoh today.

It will also release more land for tender for executive condominiums (ECs) and its design, build and sell scheme (DBSS), where private sector operators develop public housing projects.

These could yield 7,000 DBSS flats and 8,000 EC units over the next two years if demand is sustained.

In contrast, only 4,000 units have been launched for sale under the DBSS scheme since it started in 2005 and 10,000 flats for ECs in the last 10 years.

The ramp-up of supply follows Prime Minister Lee Hsien Loong’s announcement in his National Day Rally speech on Sunday that the $8,000 a month income ceiling will be slightly relaxed for the ‘sandwich group’ of home-buyers.

Those with a monthly household income of between $8,000 and $10,000 will now also be eligible to buy DBSS flats – where previously their only option apart from private property was EC units.

They will be allowed to buy the flats with a CPF Housing Grant of $30,000.

Speaking at a briefing yesterday, National Development Minister Mah Bow Tan said the increase in supply will ensure that there are enough flats for those who wish to buy. He said this would also dampen prices, although other factors such as the economy, jobs and interest rates would also play a part.

The new DBSS homes will be built in mature towns such as Yishun, Tampines, Bedok, Hougang and Jurong West, said the HDB.

The new EC homes will be spread across new and mature estates such as Sengkang, Yishun, Punggol, Pasir Ris and Bukit Panjang.

Asked if the increase in supply could create a housing supply glut in the future, Mr Mah said that supply could be adjusted to demand based on HDB’s BTO system, which builds only when a certain level of demand is reached.

He added that the measures will have an impact on the market but ‘it will not cause a great problem… but we still need to watch it’.

Mr Mah also said that the completion time for new flats will be cut from three years to 2-1/2 years for projects launched from the middle of next year onwards. This will be achieved by streamlining HDB’s internal processes and awarding the tenders for projects earlier, he said.

CBRE Research executive director Li Hiaw Ho said yesterday that first-time home-buyers ‘stand to benefit most from the measures, not only from the increase in supply providing more options, but also from an expected reduction in competition from buyers who are purchasing second and subsequent properties’.

‘The main thrust of these revised measures… reiterates the Government’s stand that HDB homes are primarily for owner-occupation and should remain so,’ he added.

Source: Straits Times, 31 Aug 2010

Private home-owners and speculators effectively shut out

THE red-hot public housing market is set to cool significantly now that private home-owners including speculators have been effectively shut out of the market.

Market watchers say recent rapid growth in HDB resale prices will moderate as the pool of potential buyers grows smaller, and more flats are put on sale.

The new rules, unveiled yesterday, ‘will have great ramifications’ on the market, said property agency PropNex’s chief executive Mohamed Ismail, as they will ‘reduce speculation and short-term investment’.

He predicts that HDB resale transactions will fall in the second half of the year by 10 per cent from the same period last year.

Median values of cash upfront paid by buyers – known as cash-over-valuation – which hit a record $30,000 in the second quarter, may dip 10 per cent by year’s end and by 20 per cent next year, he said.

HDB resale flat prices shot up 4.1 per cent in the second quarter, smashing records for the eighth straight quarter, prompting concerns that prices were beyond the reach of Singaporeans.

Jones Lang LaSalle’s head of research for Singapore and South-east Asia, Dr Chua Yang Liang, said the new policy was well directed as it is ‘more targeted at reducing speculative buying and not affecting (genuine) occupier demand’.

‘This would promote a healthier investment climate for the Singapore residential market in the longer term… HDB resale flat prices could moderate to 1 to 2 per cent per quarter,’ said Dr Chua.

He also observed that while the Government has maintained its stand about not interfering with the pricing of HDB resale flats, the stricter rules on ownership have now placed these properties firmly in the ‘public housing’ category.

Some home-seekers had lobbied the Government to cap or remove the cash-over-valuation payments for resale flats, but this aspect ‘is more about market transactions, so they’ve left that to the market’, Dr Chua said. ‘But when it comes to ownership, I think it’s more of a larger policy issue. The Government does not want people to hoard public housing and cause prices to go up.’

National Development Minister Mah Bow Tan said at a briefing yesterday that the new rules were meant to ‘ensure equitable treatment’ of all flat-owners during the minimum occupation period, which is now five years, up from three years.

He said that the measures will dampen demand for flats, and that combined with an increase in the supply of flats, ‘hopefully the market will slow down’.

As prices surged in recent months, some critics had argued that private property owners were speculating on the HDB market as resale flats typically generate healthy rental returns – resulting in a high rental yield. They could also reap gains from a higher eventual sale price.

Mr Mah emphasised that the Government aims to ‘pre-empt the overheating of the market’ and will ‘take whatever steps necessary to stabilise the market’.

‘Obviously the intention is not to crash the market, but at the same time, if we don’t rein in the market, and the bubble bursts then it will be even worse for everyone concerned, the economy as well as for individual buyers.’

Mr Mah said currently an average one in 10 resale flat-buyers owns private property. The new rules mean the buyers’ pool for resale flats will be smaller.

Records indicate that out of the pool of private property owners who buy HDB resale flats, about half sell their private property, while the other half keep it.

Mr Mah said first-timers should welcome the change in policy ‘as it means more choice for them’ and does not affect those genuine home-buyers.

Assistant accountant Edward Kwa, 27, told The Straits Times that if the new rules mean lower resale prices, it will help in his house hunt.

Mr Kwa, who is getting married next year, has been balloting for build-to-order (BTO) flats since last year but has yet to be offered one. ‘I’m glad to hear that there will be more choices and that the wait for a new flat will be shortened,’ he said.

Source: Straits Times, 31 Aug 2010

New restrictions expected to cool property market; prices tipped to soften

A SERIES of sweeping measures designed to take the heat out of the booming property market and rein in investors and speculators were announced yesterday.

The buy-at-any-cost sentiment that has been boiling away in recent months is expected to take an immediate hit, with prices tipped to soften.

The restrictions, like cooling measures last September and in February, are designed to stop a housing bubble forming.

They target owners who try to sell – or flip – their properties for a quick buck, while those aiming to buy investment properties in addition to their existing home will find it far more costly.

The new rules – which came in yesterday – also make it harder for Housing Board and private home owners to dabble in each other’s markets.

National Development Minister Mah Bow Tan, who announced the moves, told a briefing: ‘We think that if we do nothing, there’s going to be a bubble.’

He said the ‘calibrated’ steps would stabilise the private property market and prevent it from overheating.

With Singapore’s strong economic growth expected to moderate in the second half, a property bubble will likely form if the current momentum in the market continues, said Mr Mah.

‘And when the bubble bursts – not if – there will be severe implications for individuals as well as for the economy as a whole,’ he said.

‘Furthermore, the very low interest rates we are seeing today are not sustainable. And when they eventually rise… there will be severe implications for buyers who have overextended themselves.’

He said the Government had taken several small steps to cool buying sentiment, unlike its ‘big-bang approach’ in 1996, when tough measures like a capital gains tax caused a market crash.

‘All the measures are meant to affect people who intend to buy and sell … the speculators in the market,’ he added. ‘If you are a genuine buyer, if you are an owner-occupier, to all intents and purposes, these measures will not affect you.’

Property experts believe the new rules will hit sentiment instantly, with buyers likely to hold back while prices of private homes and resale flats stabilise or even fall over the longer term.

‘We may have an extended Hungry Ghost Festival this year,’ said Knight Frank chairman Tan Tiong Cheng.

But first-time buyers will have reason to celebrate, as they may find fewer potential buyers competing with them and, possibly, softer prices.

Civil servant Joshua Yap, 28, is one: ‘I will definitely resume my house search after putting it on hold for the past few months. I am very thankful for the measures because they will serve to cool the irrational market.’

The Government is also bumping up the supply of public housing, including executive condominiums.

The private housing market has so far resisted two earlier rounds of cooling measures. Private home prices surged 38.2per cent in the year to June, exceeding the historical peak of 1996.

Experts say many local buyers have been maxing out loans, but the new measures may prove a spanner in the works.

Buyers already servicing mortgages must now fork out double the cash amount to buy a second property, so the mass market private homes segment will be hit, say experts.

‘The impact will be huge for the mass market as this is where the buyers do not have that much cash,’ said a developer, adding that the market for newly-launched, uncompleted private homes will be harder hit.

‘For new project sales, I would say that the bulk of the buyers are those getting a second home. Now, upgraders will not be able to buy properties under construction if they don’t have the cash and CPF savings for the 10 (per cent) and 20 per cent down payment respectively,’ he said.

DTZ’s head of South-east Asia research, Ms Chua Chor Hoon, said: ‘Developers are likely to lengthen the period of ongoing previews and soft launches to test the market.

‘The impact will be felt more in the public resale and mass market segments due to the double whammy of a cutback in demand and increase in supply.’

The Real Estate Developers’ Association of Singapore said the new measures may affect affordability due to the higher upfront cash component, but will not hit genuine home buyers.

Cash-over-valuation levels in the HDB resale market are expected to dip, thanks largely to the huge upcoming supply of flats and a move barring private home owners from buying a resale flat while holding on to their private property.

Jones Lang LaSalle’s head of research for South-east Asia, Dr Chua Yang Liang, believes yesterday’s measures were motivated largely by the unabated rise in public housing prices. But demand should cool for HDB resale flats.

Some property consultants expect price rises for private homes to moderate. Jones Lang LaSalle forecasts that prices will now rise by 2-3 per cent per quarter for the rest of the year.

Others are less optimistic. Ms Chua believes mass-market prices will slip by a few percentage points over the next six months, citing the backdrop of uncertainty in the global economy, slower sales activity and growing price resistance.

Mr Tan added: ‘When things are moving fast, there are people who feel that they are priced out of the private market. Now, their opportunity has arrived if prices flatten out or move south.’

Property share prices fell by about 4-5 per cent in reaction to the changes.

Asked if the new measures had to do with the upcoming general election, Mr Mah said: ‘Housing has been a hot topic for as long as I can remember. (It is a) hot topic before all elections, and will be a hot topic in the next election, whenever that is.’

Source: Straits Times, 31 Aug 2010

String of steps to douse speculation; prices and sales of mass-market private homes may be hit

(SINGAPORE) The Prime Minister had hinted on Sunday that major moves were afoot to cool the property market. Even so, when the Ministry of National Development (MND) spelt out the measures yesterday, several market-watchers did a double-take. Many of them expect private home prices and sales to be hit.

Of all of MND’s new measures, analysts pegged the move to disallow concurrent ownership of HDB flats and private residential properties within the minimum occupation period (MOP) as the most significant. The MOP is the time that buyers are required to stay in their flats before they can sell.

Private property owners who buy an HDB flat now have to dispose of their private homes within six months. National Development Minister Mah Bow Tan, who announced the measures, said that right now, around half of private property owners who buy an HDB flat sell their private properties. The rest hold onto both.

The MOP for non-subsidised flats was also increased to 5 years from 3 years.

PropNex chief executive Mohamed Ismail said that the mandate to dispose of one’s private property when purchasing an HDB flat will have ‘great ramifications’ for the industry. Based on his firm’s records, about 10 per cent of all HDB resale purchases are by private property dwellers.

‘These may be investors who will now not be able to purchase HDB flats and keep their private property for investment purposes,’ he said.

MND also targeted potential buyers of second homes with two policy changes. Those who hold an existing mortgage can now only borrow up to 70 per cent of a property’s value for the second home, down from 80 per cent previously. They must also pay 10 per cent in cash, up from 5 per cent.

And owners who sell houses and apartments less than three years after buying them will also have to pay a seller’s stamp duty. Previously, the seller’s stamp duty was only imposed on those who sell their homes within one year of purchasing.

The Real Estate Developers’ Association of Singapore (Redas) said in a statement that while the latest measures may affect affordability due to higher upfront cash component, they will not impact genuine home buyers.

But at least one developer BT spoke to felt that the measures would hit sales of mass market private homes as HDB upgraders will have to cough out 10 per cent cash and can only borrow up to 70 per cent of the property’s value.

‘Genuine upgraders could be turned off as they will have to sell their HDB flats and settle that loan before buying a new property,’ the developer said. ‘Now, the practice is to buy units from developers at new launches and then wait for their new property to be built before selling existing homes.’

CBRE Research executive director Li Hiaw Ho also pointed out that the pool of HDB upgraders looking to buy private properties will shrink as this group will now have to wait for five years instead of three.

The government acted as Singapore’s strong economic growth, low interest rates and high liquidity continued to push home prices up in 2010 – sparking concerns of a property bubble. Private home prices were up 38 per cent year on year as of end Q2, while HDB resale prices climbed 15 per cent over the same period.

‘If the current momentum in the market continues, what will likely happen is that a property bubble will form,’ said Mr Mah. ‘And when the bubble bursts – not if, but when it bursts – there will be severe implications for individuals as well as for the economy as a whole. Furthermore, the very low interest rates we are seeing today are not sustainable in the long run.’

Analysts said that the new measures will hit private home prices and sales volumes.

Colliers International’s director for research and advisory Tay Huey Ying said that developers’ sale volume for September to December 2010 is now predicted to come in at the lower range of her earlier forecast of between 800-1,000 units a month.

She also revised her earlier forecast of up to 5 per cent growth in the official residential property price index for Q4 2010 downwards to ‘at most 2 per cent’.

HDB prices are also expected to moderate as the government plans to release up to 22,000 new build-to-order flats in 2011, up from the more than 16,000 in 2010. It will also release more land for executive condominium projects and design, build and sell scheme (DBSS) flats next year.

Yesterday’s measures follow earlier demand-side measures introduced in February.

Then, the government first implemented a seller’s stamp duty for all residential properties sold within one year from the date of purchase. It also lowered the loan-to-value limit to 80 per cent from 90 per cent for all housing loans provided by MAS-regulated financial institutions.

But Prime Minister Lee Hsien Loong said on Sunday that previous measures had failed to keep prices from rising.

Looking ahead, collective sales and bidding for government land sales are expected to slow down for the rest of the year as developers monitor the market and the strength of recovery in the US and European economies, said DTZ’s head of South-east Asia research Chua Chor Hoon.

Source: Business Times, 31 Aug 2010

SINGAPORE : Market watchers are not surprised by the government’s move on Monday to cool the housing market, and some even said that it’s long over due.

On average, analysts expect the latest measures to dampen private home sales by about 20 per cent for the rest of the year.

And developers may also hold back on new launches, and turn to preview sales instead.

The relaxation of some housing policies will make Design, Build and Sell Scheme (DBSS) flats more accessible to Singaporeans who belong to the ‘sandwiched class’ income group, earning between S$8,000 and S$10,000 and previously did not qualify to use CPF housing grants for them.

And observers said that could shrink the pool of buyers upgrading from public housing to a private property, causing demand for private homes to soften.

This group of buyers has been snapping up mass market private homes in the past year and fuelling price increases in the segment.

Donald Han, regional MD of Cushman & Wakefield said: “I think mass market has come up if you’re looking at the first quarter of 2008, prices have gone up by 6-7 per cent. We probably will not expect prices to come down in the next two to three quarters, but we probably expect more stabilisation in values. After all, the market needs to take a breather.

“And if we can contain the leap, in terms of price increases of HDB flats, I think it will put a lid on the price increases, in terms of the mass market as well.”

Analysts also expect developers to be less aggressive in their bids for state land.

Meanwhile, the Real Estate Developers Association of Singapore (REDAS) said the latest measures may make property less affordable upfront.

But it is confident the property market will create value for home-owners and investors in the long term.

Overall, prices are expected to moderate with the slew of cooling measures.

But experts are not ruling out further intervention from the government, citing concern over the huge amount of liquidity in the market and the low interest rates.

Colin Tan, director of Research & Consultancy at Chesterton Suntec International said: “The previous measures were largely symbolic, and it didn’t quite address the liquidity problem. Right now, you have loan to value ratio of 70 per cent, and you have a minimum cash payment of up to 10 per cent, so that will at least soak up some of the liquidity.

“If this set of measures don’t work in terms of restraining prices, we can possibly expect more measures. Going forward with what the government has mentioned – that prices have increased 11 per cent for the first half of the year – we know that a 11 per cent rise is unacceptable. So at least we now know it should be lower, much lower than 11 per cent, maybe 10 per cent for the whole year.

According Leong Waiho, senior regional economist at Barclays Capital, price levels have now exceeded the historical peak in Q2 1996.

Average private residential prices are up 38 per cent, compared with the trough in the same quarter in 2009. This also outstrips the growth in rental yields of 9.2 per cent on-year.

For the second half of the year, analysts expect private home prices to grow by up to 6 per cent.

Source: Channel News Asia, 30 Aug 2010

SINGAPORE : Market watchers said the new rules requiring private property owners to sell their homes within six months of buying an HDB flat will go some way in cooling the red-hot resale market.

New rules on second home loans may also moderate demand somewhat.

Some analysts expect the rules restricting dual home ownership to have an “almost immediate” impact on resale demand.

Chris Koh, director of Dennis Wee Group said: “Those who’ve dreamed of owning a HDB flat and a private at the same time now have to think harder. I would expect this will probably dampen prices a little.

“HDB owners who are hoping to find private property owners to buy their HDB flats and are willing to pay premiums, will no longer have that option. So those who buy flats today really buy it for owner occupation, which primarily is the function of public housing.”

The new rules kick in on August 30, and some analysts estimate that about 10 per cent of such transactions will be affected.

HDB said those who have only recently submitted their applications to buy an HDB flat may be granted exemptions on a case-by-case basis.

But there will be no such leeway for buyers looking to finance their second home, be it private or HDB, with a bank.

Under new rules, they will have to cough up a larger cash payment – from 5 per cent previously, to 10 per cent.

And those with an outstanding loan can only get a bank loan of up to 70 per cent of the property’s value, instead of the previous 80 per cent.

The idea is to prevent people from being overstretched by servicing two loans.

But those looking to buy a second home using a bank loan, may find themselves in a sticky situation. This is because a sales transaction takes a few months to complete and if you’re in the midst of selling your home which has an outstanding loan, the higher cash requirements apply.

So one way around it is to complete the sale of your first property before buying your second, but this means you’ll need to find a place to live in the meantime.

Koh suggested that an alternative is to take up a bridging loan from the bank to finance any cash or loan shortfall, should one buy first before selling.

Other industry watchers welcomed the wider options for the “sandwiched class” – so-called because their incomes are too high for most new HDB projects, but are too low for private condominiums.

They can now buy flats under the Design, Build and Sell Scheme (DBSS) and analysts expect some demand to move away from the resale market.

Some observers said the move will pile on more demand for DBSS projects, which tend to see strong take-up rates.

“From previous launches you can see that practically all DBSS projects are sold out, except for units leftover primarily because of the Ethnic Integration Ratios that have been exceeded. So by and large, most of the DBSS projects are all well taken up, and this was before including this ‘sandwiched class’,” said Eugene Lim, director of ERA Asia Pacific

According to HDB, two DBSS projects launched this year – The Peak in Toa Payoh and Parc Lumiere at Simei, with over 1,500 units in total – 90 per cent were sold out as of end-May.

HDB is looking to shorten waiting times for new flats from three years to two and a half years.

But some buyers said they may still stick to buying resale.

“Two and a half years is not my concern. The problem is I’m not guaranteed. For instance, I’m waiting for the balloting, and it ends up that I may not get what I want after the balloting result is released,” said home-buyer Ang See Ngee.

Overall, analysts said the new rules will help to ensure that resale demand is based on real demand.

Source: Channel News Asia, 30 Aug 2010

SINGAPORE: The Housing and Development Board (HDB) will increase the Minimum Occupation Period (MOP) of non-subsidised flats from three to five years.

It said this will reinforce the message that flats are meant for long-term occupation and dampen demand from those who are not in urgent need of housing.

Buyers of these flats will also be banned from concurrently owning both an HDB flat and a private residential property within the MOP.

Private property owners who buy a resale HDB flat must now dispose of their private residential property within six months from the date of flat purchase.

HDB said this will help ensure buyers purchase flats only when they have the intent of staying in it for long term and ensure equitable treatment for all flat lessees during their MOP.

Ownership of private properties by HDB lessees will be allowed after the MOP.

The changes will apply to resale applications received by HDB from Monday.

The Prime Minister in his National Day Rally speech on Sunday said more will be done to ensure that HDB flats will remain within reach of first-time buyers.

HDB will ramp up the supply of new flats, Design, Build and Sell Scheme (DBSS) flats and Executive Condominiums (ECs) substantially to meet the housing needs of first-time property buyers.

It will be offering more than 16,000 new flats this year.

If demand remains strong, HDB said it’s prepared to launch up to 22,000 new flats next year.

Over two years, it will offer more new flats than the total flats of 35,400 in Toa Payoh town today.

In addition, it will release more land for tender in 2010 to yield an estimated supply of 3,000 DBSS flats and 4,000 ECs.

In 2011, HDB will release land sites for another 4,000 DBSS flats and 4,000 ECs, if demand is sustained.

To widen their housing options, HDB will allow first-timer households with monthly income of between S$8,000 and S$10,000 to buy new DBSS flats with a CPF Housing Grant of S$30,000.

Similar to the purchase of ECs, the HDB concessionary loan will not be available for these buyers.

This revision will be applicable to DBSS projects launched for public sale after Monday.

To help households get their new flats faster, HDB has also streamlined the Build-to-Order (BTO) processes to allow flat buyers collect keys to their new homes six months earlier.

Buyers of projects launched in mid-2011 onwards will generally need to wait for two and a half years to collect the keys instead of the current three years.

Source: Channel News Asia, 30 Aug 2010

SINGAPORE: The government has introduced more measures to cool the private property market.

This comes as a strong economy and low borrowing rates have continued to push prices up, sparking concerns of a property bubble.

“If prices remain at this kind of trajectory, at this kind of momentum, it’s likely that the market itself is going to overshoot economic fundamentals,” National Development Minister Mah Bow Tan said.

“So if you ask me whether a bubble has formed already, I would say that prices are on the high side. But with low interest rates at the moment, I think people are still able to afford,” he said.

The initiatives include raising the holding period of the seller’s stamp duty from one to three years.

Another measure will impact those who have more than one outstanding housing loan.

Property buyers who already have one or more outstanding housing loans at the time of the new housing purchase will have to pay more money upfront.

The government will increase the minimum cash payment from five per cent to 10 per cent of the valuation limit.

Those with more than one outstanding housing loan will also see a decrease in the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS.

The LTV will be lowered from the current 80 per cent to 70 per cent.

The government said the objective of the measures is “to ensure a stable and sustainable property market where prices move in line with economic fundamentals”.

It noted that the property market is currently very buoyant, with prices increasing by 11 per cent in the first half of this year.

It added that while Singapore has enjoyed strong economic growth in the first half, growth is expected to moderate in the second half of the year.

Should economic growth falter and the market correct, the government said property buyers could face capital losses.

It has thus decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.

The measures will take immediate effect on August 30.

Source: Channel News Asia, 30 Aug 2010

During the National Day Rally on 29 Aug 2010, PM Lee Hsien Loong announced several measures to ensure that public housing will always remain within the reach of Singaporeans who are buying their first home. This will be achieved by increasing housing supply and dampening demand from those who are not in urgent need of housing.

This press release provides details of the measures to:

(a) Allow households earning between $8,000 and $10,000, to buy new DBSS flats with a $30,000 CPF Housing Grant;
(b) Increase the supply of new flats, Design, Build and Sell Scheme (DBSS) flats, and Executive Condominiums (EC);

(c) Shorten the completion time of Build-To-Order (BTO) flats;

(d) Increase the Minimum Occupation Period (MOP) for non-subsidised flats to 5 years; and

(e) Disallow concurrent ownership of both HDB flats and private residential properties within the MOP.

More Housing Supply and Choices for First-Time Home Buyers

HDB will ramp up the supply of new flats, DBSS flats and ECs substantially to meet the housing needs of first-time homebuyers.

HDB will be offering more than 16,000 new flats in 2010. If demand remains strong, HDB is prepared to launch up to 22,000 new flats in 2011. These numbers are substantial. Over two years, HDB will offer more new flats than the total flats in Toa Payoh town today (35,400 flats).

In addition, HDB will release more land for tender in 2010 to yield an estimated supply of 3,000 DBSS 1 flats and 4,000 ECs. In 2011, HDB will release land sites for another 4,000 DBSS flats and 4,000 ECs, if demand is sustained. This injection of 7,000 DBSS flats and 8,000 ECs over two years is also significant. In comparison, 4,000 DBSS flats and 10,000 ECs have been launched for public sale so far.

Currently, first-timer households with monthly income of between $8,000 and $10,000 may buy an EC with a CPF Housing Grant of $30,000. To widen their housing options, HDB will allow these households to buy new DBSS flats with a CPF Housing Grant of $30,000 2 Similar to the purchase of ECs, the HDB concessionary loan will not be available for these buyers. This revision will be applicable to DBSS projects launched for public sale after 30 Aug 2010.

To help households get their new flats faster, HDB has also streamlined the BTO processes to allow flat buyers collect keys to their new homes 6 months earlier. Buyers of projects launched in mid-2011 onwards will generally need to wait for 2.5 years 3 to collect the keys instead of the current 3 years.

HDB Flats for Owner-Occupation

HDB flats are meant for long-term owner-occupation. HDB will increase the Minimum Occupation Period (MOP) to reinforce this and dampen demand from those who are not in urgent need of housing.

First, the MOP of non-subsidised flats for resale and subletting of flat will be increased from three to five years. Second, buyers of non-subsidised flats will be disallowed from concurrently owning both an HDB flat and a private residential property within the MOP 4. Private property owners who buy a non-subsidised HDB flat must now dispose of their private residential property within six months from the date of flat purchase. This will help ensure that buyers purchase HDB flats only when they have the intent of staying in it for long term and ensure equitable treatment for all HDB flat lessees during their MOP. Ownership of private properties by HDB lessees will be allowed after the MOP.

The revised changes are summarised in Table 1, and will apply to resale transactions where applications are received by HDB from 30 Aug 2010 onwards.

Table 1: Changes for Non-subsidised Flats*

	Current	Revised
Resale	3 years	5 years
Subletting	3 years	5 years
Investment in Private Residential Property After Purchase of Non-Subsidised Flat	No Restriction	5 years
Disposal of Existing Private Residential Property After Purchase of Non-Subsidised Flat	Not Applicable	Within 6 months from Date of Purchase

Note: * Resale flat bought without CPF housing grant. The MOP will be computed from the effective date of purchase of the non-subsidised flats.

Source: HDB

Those with household income of up to $10,000 eligible for certain HDB flats

THE income requirements for HDB buyers have been relaxed – slightly – to give the ‘sandwich group’ more housing options.

Those with a monthly household income of between $8,000 and $10,000 will be eligible to buy Housing Board flats built under the Design, Build and Sell Scheme (DBSS).

Previously, their only option – apart from private property – was executive condominium (EC) units, as the income cap for HDB flats is $8,000.

DBSS flats have better finishes than from build-to-order (BTO) ones because private developers are given flexibility in designing, building and pricing the units.

Prime Minister Lee Hsien Loong announced this at the National Day Rally last night, saying it would help those currently caught in the middle.

‘I think this group is quite anxious about falling in between, so they are not eligible for HDB and they can’t afford private property… And because people are marrying a little bit later, their incomes tend to be a little bit higher, so they worry they will get promoted before they get settled. So we will do more to help them own their homes,’ he said.

For the sandwich class, buying a DBSS will become like buying an EC: They will be eligible for a housing grant and have to arrange their own financing.

While the $8,000 ceiling stays, the move opens up thousands of mid-priced flats to the sandwich group. In July, the HDB said there were 2,280 DBSS flats and 2,445 EC units in the pipeline.

A typical four-room BTO flat costs $300,000, a DBSS unit around $500,000 and an EC, around $700,000.

PM Lee added yesterday that more land would be released for such developments.

He also said that the Government would move to cool the private property market but declined to disclose details.

‘Otherwise you will remember nothing else about my speech,’ he said, to laughter from the audience of 1,500.

The Ministry of National Development will set out the measures today.

On public housing, PM Lee said about 22,000 BTO units would be built next year. ‘So if you miss one BTO, don’t worry, the next one is coming… There are 22,000 new flats coming along and we don’t have 22,000 new couples getting married in Singapore every year.’

He added that the HDB would also do its best to speed up construction. The average waiting time for a flat is three years.

And to drive home the message that HDB flats are for owner occupation, he said the rules for private property owners buying resale flats would be tightened.

The housing changes, one of the highlights at yesterday’s rally, are aimed at reassuring Singaporeans that they will be able to afford a home despite the surging property market.

Housing has been a hot-button political issue this year, with many voicing concerns about the spike in prices.

The latest official figures show the prices of HDB resale flats rose 4.1 per cent in the second quarter of this year, the eighth consecutive quarter of growth. The median cash-over-valuation also hit a record high of $30,000.

PM Lee acknowledged that the influx of foreigners had an impact on demand, but said broader economic forces were also at work.

He noted that though Singapore’s population hardly changed in the last two years, prices were falling until the ‘mood changed’ in the middle of last year.

‘It’s also happening in Hong Kong, in other cities around the region, in China, and therefore there are other broader factors at work. But whatever it is, it’s something which we are focusing our minds on,’ he said.

Property analysts and house-hunters yesterday welcomed the move to loosen the income criteria for DBSS flats.

PropNex chief executive Mohamed Ismail said the move was especially timely given the growing size of the sandwich group: ‘It’s a good way to ease demand without allowing the sandwich group to compete with those earning less than $8,000 for BTO flats.’

Medical professional Tay Yuxin, who is planning to marry and is looking for a home, said she was relieved as she and her boyfriend would soon bust the $8,000 cap. Said the 24-year-old: ‘There was a lot of pressure to get something so this is great as it allows us to be in less of a rush and apply for something that is affordable. Also, we have more locations to choose from.’

Source: Straits Times, 30 Aug 2010