THE Housing Board (HDB) has decided it will no longer disclose in its usual quarterly releases the overall median cash-over-valuation (COV) figure nationwide.

It has also stopped providing overall median COV figures for different housing estates and flat types.

Therefore, while the HDB will still report median COV figures for three-room flats in Ang Mo Kio, for example, it will no longer give overall COV figures for all three-room flats nationwide or all flats in Ang Mo Kio.

COV refers to the cash premium that an HDB resale flat buyer pays above a flat’s valuation. The number is closely watched because high COVs make resale flats more unaffordable for buyers.

HDB started providing overall median COV figures for the nation and across estates and flat types in the second quarter of 2007.

Back then, it said the data would bring about greater clarity and transparency in the residential property market so that buyers and sellers can make informed decisions.

Asked why it is now holding back on some of these overall numbers, HDB said they are ‘dependent on the mix of flats transacted, which vary from quarter to quarter, and hence are not as relevant’.

‘The meaningful data are those by location and flat type,’ it added.

The overall median COV nationwide for the previous quarter was $21,000. Recent media reports, quoting data sourced from various real estate agencies, had speculated that the number had risen to $30,000 or more this quarter.

Noting the omissions, SLP International’s research head Nicholas Mak said: ‘This quarter saw an increase in everything, including rentals and transactions. Perhaps the Government does not want to give flat buyers ammunition to complain.’

But Dennis Wee Group director Chris Koh noted: ‘The overall figure might not have been reflective. What people look for, on the ground, is the COV paid for a particular flat type in a location, and that’s still disclosed.’

Source: Straits Times, 23rd July 2011

Prices rise 3.1% to fresh record in second quarter

PRICES of Housing Board (HDB) resale flats are starting to sizzle again, after having grown at a slower pace in the last three quarters.

Fresh figures from the HDB, signalling that the red-hot housing market will take some time yet to stabilise, showed resale flat prices rose 3.1 per cent to a fresh record in the second quarter.

The rate of increase was only 1.6 per cent in the first quarter.

The median cash premiums paid to sellers, called cash-over-valuation (COV), also reached eye-popping levels.

In Marine Parade, for example, the median COV for five-room flats hit $95,000 in the second quarter, up from the $28,800 in the first. In Clementi, median COV for executive flats was $94,000, up from $20,000 in the first quarter.

However, it has to be noted that these COV figures are based on fewer than 20 resale transactions over the quarter and may not be representative of the market.

The HDB departed from its usual practice of releasing the overall median COV figure across all estates. (See other report: HDB to stop releasing overall nationwide COV figures) In the previous quarter, it was $21,000. But figures from property agencies obtained by The Straits Times do indicate a spike in median COV in the second quarter to about $32,000.

Property agency PropNex said yesterday that its July numbers show overall median COV, based on its sales so far this month, to have reached $36,000.

Yesterday’s numbers also reverse a moderation in the rate of increase of prices seen in the last three quarters, when price growth dropped from 4 per cent in the third quarter last year to 2.5 per cent in the fourth; price growth was 1.6 per cent in the first three months of this year.

Analysts noted that the previous estimates for the second quarter, at 2.9 per cent, indicate that resale flat prices inched up towards the end of last month. This could spell further price increases until the end of the year.

The rise in private home prices, on the other hand, continued to moderate even as they set a record, with prices rising 2 per cent in the April-to-June quarter, slowing from 2.2 per cent in the previous three months.

ERA Realty key executive Eugene Lim attributes the price pressure in the HDB market to the shortage of resale flats.

‘The number of resale flats put up for sale has fallen, partly because mass market condo prices have increased beyond the reach of many HDB dwellers, who had intended to upgrade. Many have postponed their upgrading plans,’ he said.

This, coupled with stringent rules introduced last August that bar concurrent ownership of HDB flats and private properties in the first five years of owning an HDB flat, have led many owners to hang on to their HDB homes – or let go only at high prices, say analysts.

This may explain why, despite the perceived supply crunch, HDB’s figures show the number of resale flats that changed hands rose by 6 per cent to 6,581 transactions in the second quarter.

Dennis Wee Group director Chris Koh said this fierce demand was ‘in line with expectations’, as second and third quarters are generally stronger. ‘I believe the third quarter will be even stronger than the second one because of the activities we’re seeing on the ground,’ he said.

Chesterton Suntec International’s head of research and consultancy Colin Tan said: ‘We are undergoing a supply crunch, and if you look at the completion rate of HDB flats five years ago, it’ll get worse before it gets better.’

Although the HDB has aggressively ramped up supply in the past two years, it will be some years before each batch of these flats reaches the resale market.

The HDB yesterday put the price movements down to an ‘imbalance in supply and demand for resale flats’, and said it was increasing the supply of new flats to provide more options for eligible buyers.

It has offered about 15,000 new flats under its build-to-order or BTO system and is on track to deliver 25,000 new flats this year.

Mr Tan added: ‘The question now, is how fast HDB can pull away people from the resale option before buying the new flats. If there’s a large price gap between resale and new flats, and it doesn’t make sense for people to buy resale any more, then the volume of buyers will shrink.’

Source: Straits Times, 23rd July 2011

Prices start from $137k for 3-room flat and $274k for 5-room unit

Segar Meadows in Bukit Panjang will have three- and four-room flats. — PHOTO: HDB

CHEAPER prices – and a wide range of new flats – are the big draws for first-time buyers in the latest launch of Build-to-Order (BTO) flats.

The Housing Board (HDB) is offering 3,556 flats in seven locations in Sengkang, Tampines, Jurong West, Bukit Panjang and Yishun.

Indicative prices for the three-, four- and five-room flats are cheaper than those in previous BTO projects.

They start from $137,000 for a three-room, $217,000 for a four-room and $274,000 for a five-room flat.

The starting prices were $166,000, $264,000 and $335,000 for the same flat types in May’s launch of 4,000 new flats.

The lower prices announced yesterday come even as the HDB resale price index continues its upward march – suggesting a widening price gap between new flats and resale ones.

HDB’s new homes are typically pegged to resale prices but are discounted.

The new launch follows National Development Minister Khaw Boon Wan’s recent pledge to combine launches. In a previous blog post, he had noted that large ones ‘offer buyers a wider range of choices and reduce the odds of repeated disappointment’.

‘I am therefore working with HDB to see how the June and July launches can be combined for a larger launch. And I will price them wisely,’ he had said.

Analysts whom The Straits Times spoke to said yesterday’s rollout demonstrates Mr Khaw’s commitment to aggressively ramp up supply in a cost-effective manner to relieve the hot demand for homes.

Current median cash premiums – paid on top of valuation – for resale flats have risen to about $32,000 from $21,000 in the last quarter, noted property agency PropNex spokesman Adam Tan, which hurt more price-sensitive first-time buyers.

HDB resale flat prices have climbed a further 2.9 per cent in the second quarter according to official estimates – on the back of a 1.6 per cent increase in the first quarter and a 14.1 per cent hike last year.

He noted that though the new launch’s lower prices could be due to the location of the flats, there was a distinct trend of offering a bigger discount.

‘In the past, new flats were discounted at a range of 15 to 25 per cent from similar resale flats in the area – we are seeing this range expanded to 23 to 32 per cent now,’ Mr Tan said.

Mr Nicholas Mak, head of research at SLP International, said the attractive pricing will further alleviate demand in the resale market and shift first-time buyers’ preference to HDB’s new flats.

The launch yesterday offers 381 studio apartments in Tampines and Jurong West – ranging in price from $83,000 to $96,000.

There are 459 three-room, 1,674 four-room and 1,042 five-room flats – with the option of standard and premium finishes – in Sengkang, Bukit Panjang and Yishun at a price range of between $137,000 and $421,000.

The launch will bring HDB’s supply of new flats this year to about 15,500. It said yesterday it is on track to deliver 25,000 new BTO flats for this year.

Mr Tan expects the new flats to be ‘very well received’.

As of 5pm yesterday, HDB had received 1,541 applications for the 3,556 flats.

The closing date is next Wednesday.

Source: Straits Times, 15th July 2011

RESALE flat prices have risen partly because of a falling supply, experts told The Straits Times yesterday.

The prices jumped by 2.9 per cent over the past three months – compared with an increase of only 1.6 per cent in the quarter before, Housing Board figures showed.

Analysts put this down to a significant drop in the number of resale flats on the market.

They gave several reasons for the supply crunch. First, some HDB flat owners are hanging on to their units because rising private property prices mean it is too expensive for them to upgrade.

ERA Realty’s key executive officer Eugene Lim said: ‘Many HDB upgraders have found private property prices, especially those of mass market condos, out of reach, so they postpone upgrading plans.’

Another possible factor behind the supply crunch is the rule issued in August last year that requires those buying HDB units to sell their private property within six months.

Mr Lim said the rule could deter those who have upgraded to a private apartment from putting their HDB flat on the market.

This is because they would be unable to buy another HDB flat without getting rid of their private apartment. ‘Were upgraders to want to buy a flat again, they would have to sell off their private property,’ he said.

Those in this situation who decide to sell their private apartment to get an HDB flat will subsequently have to wait five years before they are eligible to buy another private property because of the increase in the minimum occupancy period (MOP) for HDB flats in August last year.

‘HDB dwellers who are able to upgrade after the MOP is up might choose to sublet their whole units instead and collect rent to defray other costs,’ said Mr Lim.

SLP International’s head of research Nicholas Mak said those with existing home loans could be being put off upgrading because of a change in the law in January which means they cannot borrow more than 60 per cent of the value of the property they want to buy.

‘Most flat owners with existing mortgages are unable to cough up the 40 per cent cash, even more than that when legal fees and stamp duties are included,’ he said. ‘This means they would have to sell before getting another loan and have nowhere to stay in between.’

PropNex chief executive Mohamed Ismail said high demand could be another factor behind the rising flat prices.

Buyers who held back to assess the impact of cooling measures brought in earlier this year could now be coming back into the resale market. ‘However, there are still many HDB owners who are reluctant to sell, resulting in a supply crunch,’ he said.

Mr Mak added that he is seeing fewer HDB upgraders based on his data gathered from government figures.

Mr Lim said because of the limited supply, many transactions are being negotiated not on the flat’s actual price, but on its cash-over-valuation (COV) – the amount the buyer is willing to pay over and above the official value.

Fresh data from ERA Realty puts the median COV at $37,000 for last month, while PropNex’s median COV last quarter stands at $32,000, up from $22,000 in the previous quarter.

According to an earlier report sourced from real estate firms, median COVs rose by almost 50 per cent to about $30,000 between April and last month.

Calling the current trend of COVs unsustainable, Mr Ismail said the figure will likely hit $35,000 for this quarter, before settling to $32,000 by the year end. It will also dip further should the Government continue to provide new public housing at the current brisk clip.

Mr Ismail also estimates the HDB resale price index to increase by up to 9 per cent for the full year.

Source: Straits Times, 2nd July 2011

NATIONAL Development Minister Khaw Boon Wan has his work cut out to meet demand for public housing – while tempering prices – given new data about the red-hot market.

New figures show that HDB flat prices in the second quarter rose at their fastest clip since the third quarter of last year.

According to preliminary estimates, the Housing Board resale price index in the second quarter rose by 2.9 per cent to a fresh record from the previous quarter.

Resale flat prices in the first three months of the year rose 1.6 per cent in comparison.

Prices of private homes, on the other hand, increased at a slower pace in the second quarter.

The 1.9 per cent gain in the private residential property price index is the seventh consecutive quarter in which the rate of increase has fallen.

The data is mostly based on transaction prices in caveats lodged during the first 10 weeks of the quarter.

Taken together, the emerging picture is that of home buyers flocking to buy HDB flats and shunning pricier private homes.

A recent report by Goldman Sachs showed that the price gap between mass market private homes and HDB flats has widened to a record – making it harder than ever for aspiring HDB upgraders to buy a private home.

Analysts noted that HDB flats remain affordable despite public housing prices showing a sharper rise compared with private housing.

‘This is because private property prices, in particular mass market condo prices, have increased beyond the reach of many HDB dwellers who had intended to upgrade,’ said ERA Realty key executive Eugene Lim.

Four rounds of cooling measures since September 2009 – including lowering the loan quantum to 60 per cent for borrowers with more than one outstanding housing loan – and uncertainties in the global economy have done much to keep a lid on price increases for private homes.

But it is a different story for HDB flats.

First timers, HDB upgraders, private property owners who downgraded to public housing and permanent residents have stoked demand for HDB flats.

Although HDB has rolled out new build-to-order (BTO) flats in record numbers – about 25,000 new flats will be offered for sale this year – the fresh supply will take time to filter down to the market.

Some unintended consequences from stiffer HDB rules introduced last August, such as a blanket five-year minimum occupation period before flats can be resold, have resulted in fewer flats available for sale in the market.

PropNex chief executive Mohamed Ismail said the curbs have deterred many owners from moving or selling their flats, ‘resulting in a supply crunch and driving (up) median resale prices’.

While the flash estimates did not provide data on median prices or cash premium paid for a resale flat on top of its valuation – known as cash-over-valuation (COV) – ERA and PropNex records showed that both median prices and COV were up in the second quarter.

PropNex data showed that the greatest price increase was in the executive apartment segment, which rose 5.3 per cent to a median price of $574,500.

This flat type also saw the biggest increase in COV, up by 50 per cent to $45,000. Overall, COV for flats rose to $32,000 from $22,000.

ERA’s data also painted a similar picture.

As prices of private homes grew in inverse proportion to their size, some cash-rich home seekers are opting for executive flats for the generous space they afford and are willing to pay higher COV for them, analysts noted.

Providing affordable housing to first-time buyers is a key priority of Mr Khaw, who took over the housing portfolio from Mr Mah Bow Tan in May.

Rising home prices, particularly in public housing, is a major concern among first-time buyers.

Mr Khaw has acknowledged these concerns and has directed the HDB to speed up its offering as well as provide a wider selection of flat locations.

In its statement yesterday, the HDB said it will launch 2,000 flats under a sale of balance flats exercise next month. Some of these flats will be in mature estates.

The board is also on track to offer 22,000 BTO flats by September and a further 3,000 BTO flats in the fourth quarter.

Source: Straits Times, 2nd July 2011

PRs, private property owners still make up nearly 30%, while 23% are first-timers

The profile of buyers driving the hot Housing Board (HDB) resale market has been revealed – and it seems private property owners and permanent residents (PRs) still make up a sizeable chunk of the demand for such homes.

Together, these two groups comprise almost 30 per cent of transactions, according to new figures released by National Development Minister Khaw Boon Wan in his latest blog post yesterday.

He also announced in the same posting that HDB will be combining the June and July launches of its new build-to-order (BTO) flats into one exercise in mid-July.

Earlier, he had flagged larger launches as a way to give flat buyers a wider choice of flat types and locations, and to reduce the potential number of unsuccessful attempts on their part.

The new figures released by Mr Khaw looked at the 2,162 HDB resale transactions closed last month.

They showed that a fifth of buyers were permanent residents (PRs), 8 per cent were private property owners and about a quarter – 23 per cent – were newly married couples, or first-timers.

The latest data surprised some industry experts, given that new rules last August introduced by Mr Khaw’s predecessor Mah Bow Tan had restricted home ownership of resale flats for the first two groups.

Mr Mah revealed last year – before the implementation of the new rules – that 10 per cent of buyers in the resale HDB market were private property owners, while PRs made up 20 per cent.

The rules required private property owners who bought resale flats to dispose of their private property within six months. PRs who had overseas properties in their home countries also had to declare and dispose of them before they could buy an HDB flat.

Venturing explanations as to why these rules did not seem to have a deep impact, analysts said that people were likely selling private homes – with prices now at record highs – and buying HDB resale flats because it seemed a safer option for now.

Mr Colin Tan, research and consultancy director at Chesterton Suntec International, said that such buyers could be downgrading for good, or waiting for the market to correct before buying private homes again.

‘There have also been a spate of en bloc sales, so these cash-rich owners are likely to turn to the HDB resale market,’ he added.

PropNex chief executive Mohamed Ismail said the new ownership rules had not put PRs off.

‘These families prefer to buy a home in Singapore as rental rates are high. They will do so even if it means disposing of their overseas property,’ he said.

ERA Realty key executive officer Eugene Lim expressed surprise at the proportion of first-timers in the resale market. Based on his own agency’s data, they made up less than 10 per cent of sales.

‘The figures show that first-timers still feel the three- or four-year wait for new flats is too long and they are still looking at the resale market,’ he said.

Mr Khaw noted that the data showed demand for all flat types was evenly distributed, with four- roomers enjoying an edge.

Second-timers were also the largest group of buyers, although they preferred smaller flats compared to first-timers who picked larger ones, he said.

‘Earlier rounds of cooling measures, increased supply of BTO flats, latest BTO launch prices, the state of the economy and loan interest rates will combine to impact our housing market,’ he wrote.

‘The interactions are complex and do not work entirely in a mechanical way. There will be fluctuations and short-term volatility, at both volume and price levels. We will have to be patient to allow these changes to work their way through the market.’

Although Mr Khaw did not reach any concrete conclusions based on the data, some analysts said his musings could signal that something was brewing.

Mr Tan, for example, said that while such data improved transparency, the minister could be releasing it to justify future policy moves.

Source: Straits Times, 26th June 2011

After falling for two quarters, cash premiums paid for Housing Board (HDB) resale flats are on the rise again.

Fresh data obtained by The Sunday Times from real estate agencies shows the median premium, or cash over valuation (COV), paid in the April to June period has risen to about $30,000.

This is almost 50 per cent higher than the $21,000 median COV registered for the first quarter.

Last week’s figures reverse the trend of COVs falling after the Government moved last August to cool the housing market by restricting financing and tightening home ownership rules.

With sustained high demand for homes coming up against tight supply, the median COV is now close to the official record of $30,000 logged in the third quarter of last year.

COV is the amount a buyer pays over and above the valuation of an HDB resale flat. Because it must be paid in cash, it has a significant impact on affordability, and it is often used as an indicator of demand in the market.

The new figures were sourced from three of Singapore’s biggest property agencies – PropNex, ERA Asia-Pacific and the Dennis Wee Group (DWG) – which together account for about two-thirds of HDB resale market sales.

Spokesmen at smaller agencies – such as C&H Properties’ key executive officer Albert Lu – said their data also shows an increase of median COV to about $30,000.

But agency bosses note that their numbers might be slightly higher than HDB’s when official figures are finally released, because their sales data is captured at an earlier point of the buying process – when a buyer exercises his option to purchase a home.

HDB is set to release flash estimates for the second quarter this week.

The agencies’ data shows the median COV rising across most estates, with the increase especially pronounced in popular areas such as Bishan, Central and Queenstown.

According to PropNex, whose figures are based on sales closed from April to mid-June, the median COV for all flat types hit an eye-popping $55,000 in Central, $54,000 in Queenstown and $35,000 in Bishan.

These are steep increases from the median overall COVs of $27,000, $23,000 and $29,500 logged in the respective towns in the first quarter, according to official HDB figures.

Property analysts say the turnaround of COV levels is due to increased buying interest this quarter, and this is also reflected in the rising median resale flat prices.

Data from all agencies shows prices inching upwards across all flat types.

Based on DWG sales, for example, the median price of four-room flats went up by $4,000 in June to $398,000 compared to first-quarter figures. ERA Realty data shows the median resale price of five-room flats rose to $573,000 before dropping to $535,000 in June, compared to $550,000 in the first quarter.

Experts say that even though valuations are catching up with prices, COVs are still rising because of two factors.

First, demand is still strong because home buyers priced out from the private property market – which has also seen record high prices – are turning back to the HDB resale market.

Second, the supply of resale flats is shrinking as more owners are also taking their homes off the market, thanks to the effect of the recent rule changes.

‘Flat owners are reluctant to sell as many have been affected,’ said DWG director Chris Koh, referring to recent moves stipulating that banks can lend only 60 per cent of a home’s value on a second property.

This has made it difficult for any home owner who wants to buy a new home before he sells his current one, causing many of them to simply put off selling altogether.

C&H’s Mr Lu said demand in the resale market will likely remain high even though HDB is ramping up the supply of new homes. This is because these will take time to be built and enter the resale market.

Another interesting trend that has emerged from the data is that sales volume has dropped sharply from May to June.

DWG brokered 664 transactions in May, and 516 so far this month. At PropNex, the number of sales dipped from 434 in May to 142 to date.

On top of the shrinking number of sellers, some analysts attribute the June phenomenon to what they call the ‘Khaw effect’, referring to the slew of remarks made by newly minted National Development Minister Khaw Boon Wan since he took office.

Market observers say developers, home buyers and investors alike are adopting a wait-and-see attitude as they await clearer signals from the ministry.

In particular, they are looking to see if the Government will move to cool the market further if prices continue their upward march.

Still, most of Mr Khaw’s recent moves have been targeted at the market for new flats which cater to young couples, noted ERA Realty key executive officer Eugene Lim.

‘Key demand drivers of the resale market are upgraders and downgraders, permanent residents and those who cannot wait for new flats.’

But he added that further big price hikes are not likely as prices have already hit some resistance, especially for the larger flat types.

Mr Lu said agents are reporting that young buyers are holding back from buying resale flats after Mr Khaw said that HDB will look into offering more of its flats in mature estates, and this will also help cool demand somewhat.

This is exactly what potential home buyer Yvonne Koh, 27, and her boyfriend are hoping for.

‘We were thinking about resale flats but the COVs are going up. Now, there is a wider range of flats offered by HDB, so we will wait for the new flats,’ she said.

Source: Straits Times, 26th 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

MR PATRICK Tan asked four questions on Design, Build and Sell Scheme (DBSS) flats (‘Flat pricing: Four questions on DBSS’; yesterday).

They are good questions.

Land for DBSS flats is sold via open tender to private developers.

DBSS flat buyers are indeed subsidised by the Government, but they receive their subsidy directly through the Central Provident Fund housing grants.

In bidding for the land, developers will have to take into account the demand and the prices they will charge for their flats. If they over-bid, they will make a loss on the project. If they over-price their flats, they risk poor demand.

In the case of Centrale 8 at Tampines, Sim Lian, the developer, won the tender last year at $260 per sq ft.

In accordance with the contractual terms when it tendered for the land, the developer has the flexibility to price the units. HDB does not dictate their prices nor profit from their sales.

The DBSS scheme was introduced in 2005 to offer greater choice and wider variety to meet the housing aspirations of higher-income flat buyers for better design and finishes. So far, 5,500 DBSS units have been built and sold. They make up a small proportion of public housing, but are well appreciated by the buyers.

As part of the overall review of housing policies, the Ministry of National Development will be reviewing the DBSS housing option.

Lee May Gee (Ms)
Deputy Director, Housing Division
Ministry of National Development

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