Source: Channel NewsAsia

The Housing and Development Board (HDB) is reviewing its rules to curb speculation and illegal subletting in the public housing market. National Development Minister Mah Bow Tan said the move is to ensure prices are not being artificially inflated. The review comes amid fresh concerns over the affordability of public housing sparked off by HDB’s latest data that showed resale flat prices continued to climb in the fourth quarter of last year. In addition, the median cash premium that home owners have to pay upfront doubled to S$24,000, prompting calls for the government to step in.

But Mr Mah noted that the resale market should be allowed to operate as a free market, with prices set on a “willing buyer, willing seller” basis. He said: “Now, if you are a buyer, you feel anxious because you want prices to be low. But if you are a seller, you want prices to be high. So it’s not possible for the government to set the resale prices.

“If you were to interfere in the COV (Cash—Over—Valuation), or the resale flat market, essentially, you are saying the government should set the resale flat prices which I think both parties will be unhappy. Why? Because the buyer may be happy today, but today if he’s a buyer, tomorrow he would be a seller. Then when we set the prices and he wants to sell, he will be unhappy.”

While promoting a free market, Mr Mah drew the line at speculation and stressed that HDB flats are for “owner—occupation, not speculation or rental investment.” As such, Mr Mah said the housing board is relooking rules to ensure that prices are not being artificially inflated.

“If somebody is coming in and buying because they hope to make money, through flipping or selling the flats later on, or to buy to rent without staying in there, I think that’s not possible. That’s not the idea of HDB flats,” he said. Mr Mah declined to say which rules are being studied. But he noted that the review will be completed in a few months’ time. How much impact will the review have? Housing analysts said speculators are not the main problem, because prices are not rising fast enough to lure them in.

ERA’s Asia—Pacific associate director Eugene Lim noted that for speculators to be lured into the market, prices have to be moving up very fast. But that’s not happening in the public housing market. For example, prices of HDB flats only increased by 8.2 percent in the past year.

He added that the mandatory holding period before you can sell your flat — one year if you’ve taken a bank loan; 2.5 years for those who borrowed from HDB — also acts as a deterrent against flipping.

Mr Lim said: “It’s basically a case of demand more than supply, because there are probably more people with immediate housing needs now, who cannot wait for the three years for new flats to be built. There is also an increasing population of PRs. They’re not allowed to buy from HDB direct, so they have to go to the resale market.”

But Mr Lim noted that while business from PRs now accounts for 25 percent of his firm’s business, up from 20 percent previously, that is still considered small. He added the review of rules is a sign that HDB is “leaving no stone unturned”.

But demand is being pushed up partly by those who buy flats to earn rent.

Mr Lim said: “If an investment gives you 7 to 8 percent (returns), it is certainly very attractive to look at. Because it’s quite easy to rent out HDB flat. It doesn’t cost much — with $300,000 or $400,000 you can get a HDB flat, you can get good returns, it does attract a fair number of people to look at this option.”

Latest HDB figures showed that between January 2008 and December last year, 56 homeowners were caught renting out their flats illegally.

And recent reports suggested that some flat owners at the newly completed Pinnacle@Duxton had rented out their entire units without a minimum occupation period. This is illegal under HDB’s housing rules.

Home buyers who received a grant from HDB must stay in their flat for a minimum of five years before they can sublet their entire unit. For those who do not use a grant, there’s a minimum occupation period of three years.

Offenders face a fine of between S$1,000 and S$21,000 and may even have their flats repossessed.

Mr Mah said: “I’ve asked HDB to also step up on any possible breaking of the rules. I don’t know if it’s extensive but anecdotally you do hear one or two cases. So we want to make sure that this is not happening.”

But observers said many of these transactions are done under the table. So even if rules are tightened, enforcement will be difficult.

However industry players like Chris Koh of Dennis Wee Realty noted that new rules requiring homeowners to report the details of their tenants are an incentive for them to be honest.

But he felt that there is scope to increase the penalties further, and to penalise agents who facilitate illegal transactions.

And to help curb demand, analysts suggested tweaking rules on how flats are financed.

Currently, a buyer can take out a loan to pay for up to 90 percent of the purchase price of a new or resale flat.

Analysts suggested HDB lower that quantum and make buyers fork out a larger down—payment. This could force them to reassess just how much they can afford, thereby serving as a check on escalating prices.

Source: Channel NewsAsia

Is there a role for Singapore’s Housing and Development Board (HDB), now that the entire population has been housed?

Prime Minister Lee Hsien Loong said the answer is “Yes” as the HDB is still responsible for providing good public housing and fostering social integration.

Speaking at its 50th anniversary, Mr Lee also revealed that the board will celebrate half a century of achievements by building its one millionth flat this year.

The HDB is a central part of the Singapore Story, said Prime Minister Lee. Over half a century, it housed a growing population and was integral in nation—building.

Mr Lee said: “Two generations of Singaporeans have grown up in HDB flats. Public housing helped to mould our unique national identity and collective experience as Singaporeans. It created and shaped our communities and provided the foundation for our social stability and economic growth.”

But Mr Lee noted that the environment has changed and the aspirations of Singaporeans have risen sharply.

He added: “Finding a roof over our heads is no longer the pressing requirement. The HDB flat is not just a shelter but also a key investment asset. People have many considerations in choosing their flats — they want the right flat, in the right locality, at the right time and at the right price.

“Such high expectations are understandable since buying a flat is a major commitment for a young couple setting up a home together.”

And HDB is committed to providing high quality housing, even though it cannot accommodate every preference or expectation.

The prime minister also emphasised a point expressed several times by other ministers and very much an ongoing concern amongst flat buyers in the rising property market. And that is the government’s commitment to keeping HDB flat prices affordable for Singaporeans.

But Mr Lee said the government has less control over prices in the resale market.

He explained: “These resale prices are set by individual households who transact flats on a willing—buyer, willing—seller basis, and are affected by movements and sentiments in the wider economy, including in the private property market.

“Hence, resale prices of HDB flats will fluctuate from year—to—year. But over the long term, the value of HDB flats depends on the strength of the Singapore economy.”

So provided Singapore continues to do well, Mr Lee is confident the flats will maintain their value and Singaporeans can enjoy an appreciating asset.

Source: Straits Times Forum

Foo-Ho Yoke Ming (Mrs)
Deputy Director (Branch Operations)
Housing & Development Board

I REFER to Ms Mary Tan’s letter last Tuesday, ‘Subletting – Relaxation of rules works against genuine residents’. HDB flats are primarily meant for owner-occupation.

Each household can own only one HDB flat at any one time. However, we recognise that some flat owners may need to sublet their rooms or flat to meet their financial needs.

Therefore, flat owners can sublet their flats if they meet the HDB’s policy requirements. Flat owners who wish to sublet their whole flat must obtain approval from HDB and fulfil the minimum occupation period. HDB’s approval is not needed to sublet room(s) within a flat.

From Feb 1, owners who sublet rooms must register the subletting with the HDB within seven days of doing so. They must also notify the HDB when they renew or terminate their subletting contracts and when there are changes to their tenants’ particulars.

The new requirement supports the Ministry of Home Affairs’ efforts to eradicate loan-sharking activities, and to better protect HDB residents.

Flat owners who sublet rooms or their whole flat must comply with our terms and conditions, and ensure that their tenants do not disturb or inconvenience other residents unnecessarily.

Tenants cannot further sublet the flat to others. The HDB takes a very serious view of unauthorised subletting of flats and will act accordingly.

Source: Today Online

Many of those who sold their HDB flats in the fourth quarter of last year had plenty to cheer about: Not only were they able to sell their flats at even higher prices; the owners also received more cash upfront from their buyers.

Prices of resale HDB flats rose 3.9 per cent between October and December, bringing the full year increase to 8.2 per cent. The latest statistics from the Housing Board show that 93 per cent of resale transactions in the fourth quarter were above valuation. And the median cash-over-valuation (COV) paid by home buyers jumped by 100 per cent – from $12,000 in Q3 to $24,000 in Q4.

Real Estate lecturer at Ngee Ann Polytechnic, Mr Nicholas Mak, said the increase may be due to more sales involving larger flats.

“There seems to be more families that are going in to buy larger flats — your four-room and five-room flats. As a result, these larger flats also come with higher cash-over-valuation amount which, in a way, pulls up that median cash-over-valuation.”

But this increase is unlikely to continue indefinitely. The HDB noted that the median COV amount had stabilised in recent months. The cash premium for the first half of this month (subs: Jan) has come down slightly to $22,000.

Some analysts believe this may indicate that the market is approaching a limit. Mr Mak said: “Our salary is still not catching up at such a high rate, there will be a certain time when the affordability issue will come into play. “As the sellers start to demand higher and higher COV … there may come a stage when there will be some buyer resistance.”

Efforts by the Government to raise the supply of new homes will also gradually help to cool the market once the flats are completed, said Mr Colin Tan, head of Research for Chesterton Suntec International.

“The Government’s efforts at pushing out the BTOs (build-to-order) and DBSS (Design, Build and Sell Scheme), and all the executive condos, that may have helped to allay some of the panic buying. And this probably resulted in some people actually shifting the demand from the resale market to the new flats,” Mr Tan added.

To meet demand, the HDB said that it will be offering nearly 7,000 new flats in the first half of this year. The flats will be built in areas such as Sengkang, Sembawang, Punggol, Yishun and Jurong West.

Updated on 22 January 2010, press release. HDB Resale Price Index at 150.8(0.1 point higher than flash estimate) in 4th Quarter 2009. Not so good news for buyers, sellers expectations remain high probably causing contraction in resale deals by 23%. HDB Housing Data is great but general info, median prices, median COVs, delayed etc … I hope there will be more real time data. The best estimate is to mashup Resale Transactions & Public Housing Data. At the end of the day it still bogs down to your affordability. So calculate before commit.

Source: Channel NewsAsia

SINGAPORE: Prices of Housing and Development Board (HDB) flats are at their highest on record.

According to preliminary estimates from the HDB on Monday, the Resale Price Index of public flats stood at 150.7 in the fourth quarter of 2009 – highest on record since data was compiled in 1990.

Extra(updated 22-01-2010):

 

Estimates show that prices of resale flats rose 3.8 per cent in the last three months of 2009, the fastest pace of growth since the third quarter of 2008. For the whole of last year, prices of resale flats rose about 8 per cent.

HDB said flat buyers can look forward to 1,300 build-to-order (BTO) flats in Choa Chu Kang and Hougang, which will be offered for sale on Tuesday.

The housing board said it will continue to launch more BTO projects this year if there is sustained demand for new flats, and will ensure that there is an adequate supply of flats to meet prevailing housing needs.

The HDB is due to release detailed resale price data and public housing data for the fourth quarter on January 22, 2010.