Published January 29, 2011

HDB resale prices up 2.5% in Q4 2010
Up to 22,000 new flats may be offered under the build-to-order system

By UMA SHANKARI

HDB resale prices rose by 2.5 per cent in the fourth quarter of 2010 - a tad higher than the 2.4 per cent climb estimated earlier this month - even as the number of deals and the cash-over-valuation (COV) amounts commanded by flats fell.

Data from the Housing & Development Board (HDB) released yesterday showed that the official resale price index climbed to yet another new high in Q4 2010. For the whole of 2010, HDB resale prices rose by 14.1 per cent.

Prices rose even as the median COV amount among all resale transactions fell by $7,000 (or 23 per cent) from $30,000 in Q3 2010 to $23,000 in Q4 2010.

But prices still rose as valuations of most types of HDB flats climbed in Q4, analysts said.

The number of resale transactions fell by about 21 per cent, from 8,205 in Q3 2010 to 6,454 in Q4 2010. The total number of resale transactions in 2010 fell to 32,257, a decline of 13 per cent over 2009's volume.

Analysts said that HDB flat valuations still increased in Q4 2010, in spite of a number of cooling measures introduced in August 2010, as there is usually a lag time of about six to eight weeks before price corrections would align with the actual sentiment in the market.

But resale prices could soon plateau, PropNex chief executive Mohamed Ismail said.

HDB's Q4 2010 data shows that median resale prices of 3-room, 4-room, 5-room and executive flats stood at $300,000, $385,000, $460,000 and $548,000 respectively, he said.

But PropNex's in-house data for deals done in January shows median resale prices of $298,000, $393,000, $466,000 and $538,000 respectively - a 1.8 per cent drop to 2.1 per cent increase from Q4 2010.

'It must also be highlighted that some of our data reflects transactions that took place before the additional cooling measures announced on Jan 13, 2011,' added Mr Mohd Ismail. 'Feedback from the ground has indicated that there is less movement among the current HDB dwellers due to the (new) 60 per cent loan-to-value (LTV) cap. Therefore, it is possible to see a further dip, though not drastic one, for median COVs and sales volume in Q1 2011.'

HDB plans to offer up to 22,000 new flats under the build-to-order (BTO) system if demand is sustained.

The BTO supply will also be supplemented by the upcoming supply of flats under the design, build & sell scheme (DBSS) and the executive condominium (EC) housing scheme. Four more EC developments in Punggol, Pasir Ris, Bukit Panjang and Tampines will be launched for sale in the coming months by private developers.


Source: www.businesstimes.com.sg

Published January 26, 2011

HDB launches 3 BTO projects with 1,728 flats
Bt Batok project will have 180; projects in Yishun will have total of 1,548 units

By UMA SHANKARI

THE Housing & Development Board (HDB) yesterday launched for sale three more build-to-order (BTO) projects - one at Bukit Batok and two at Yishun - with a total of 1,728 standard flats.

The Bukit Batok project, Golden Daisy, will comprise solely of 180 studio apartments which will sell for between $83,000 and $118,000 each.

The two projects in Yishun - Orchid Spring @ Yishun and Vista Spring @ Yishun - offer a mix of two-room, three-room, four-room and five-room flats. Orchid Spring @ Yishun, located along Yishun Avenue 11, will have 948 units while the adjacent Vista Spring @ Yishun offers 600 flats.

Prices at the two projects range from $93,000 to $112,000 for a two-room flat; $150,000 to $183,000 for a three-room flat; $230,000 to $278,000 for a four-room flat; and $292,000 to $353,000 for a five-room flat.

Analysts said the attractive pricing of the Yishun flats would be a draw and expect that over-subscription rates for the projects could be as high as five times. The two projects are located in the same vicinity as a sold-out private condominium project, The Estuary.

'Pricing is attractive when compared to resale flats in the same locality that are about 22-24 years old. The new three-room flats are 30-40 per cent cheaper, while the four-room and five-room flats are 7-12 per cent and 16-21 per cent cheaper respectively,' said ERA's key executive officer Eugene Lim.

The flats at Yishun are clearly targeted at young couples and families, analysts said. Besides playgrounds, fitness stations and a jogging track, Orchid Spring even boasts a child care centre within the development itself.

By contrast, the 180 units at Golden Daisy are meant for senior citizens, observed PropNex corporate communications manager Adam Tan. But the apartments are not likely to be keenly contested for as studio apartments are never in very high demand, Mr Tan added.

HDB has ramped up its new flat supply significantly to meet the demand from first-timer households.

This year, the agency will offer up to 22,000 new flats under its BTO scheme if demand is sustained. This is 24 per cent more than the 17,700 flats offered for sale under the BTO scheme and sale of balance flats exercise in 2010.

In the first six months of 2011, about 11,000 new BTO flats will be offered. The upcoming projects will have a good geographical spread in towns such as Bukit Panjang, Jurong West, Punggol, Sengkang and Yishun, HDB said.


Source: www.businesstimes.com.sg

While the Government has to act to prevent the property market from getting beyond the reach of most Singaporeans, I am however not very comfortable that the latest steps - announced last week - are the best means of dealing with the issue.

Not only are the measures fairly drastic, they appear to be dealing more with curbing demand than raising supply.

The Government has claimed that there is no shortage of supply. It points out that the sites awarded last year under the Government Land Sales Programme (GLS) will yield about 13,300 units. For the first half of this year, it says it will make available sites that would be able to yield about 14,300 units.

Further, as at the end of the third quarter of last year, there were about 64,400 uncompleted units in the pipeline, of which roughly half were still unsold. These compare with the annual take-up rate of about 12,700 units between 2007 and last year. Unfortunately, there is a lag period between the site award and the sale of the property.

The latest attempt to cool the property market may have the unintended effect of reducing supply as developers decide to take a wait-and-see approach. They might be even willing to pay the penalties for missing completion deadlines rather than sell at a loss. It could also see the bigger developers with the financial muscle to hold being able to take advantage of those who can't hang on to their sites.

And will the new rules which took effect the day after they were announced - Jan 13 - force buyers to give up options, now that financing will be more difficult to obtain?

Under the new rules, financial institutions can only grant loans amounting to half the value of the properties purchased by non-individuals, such as companies, trusts and collective investment schemes. Individuals with existing outstanding mortgages can now borrow only up to 60 per cent of the value of their next property purchase.

Another unintended effect could be that those who have the financial resources will be able to get more properties on the cheap - to sell when prices recover later.

But should the Government be overly concerned with private-sector housing? Should it be going all out to prevent a fool from parting with his money?

Despite numerous warnings about the dangers of a property bubble bursting and that the current low interest rate regime might not last for too long, property prices, prior to the latest measures, continued to climb.

I believe the Government should be more concerned about housing the masses. It has done a marvellous job, having built more than one million units since the Housing and Development Board (HDB) was established. At present, some 900,000 units house more than four-fifths of the population. For the vast majority of newly-weds, their first home is likely to be an HDB flat. These are the people whom the Government has to be concerned with.

The Government has said it will be building more HDB flats - up to 22,000 Build-To-Order flats this year - to accommodate the masses. Will these be enough?

It should perhaps also get out of building executive condominiums (EC) units which provide condo-like facilities and the Design, Build and Sell Scheme (DBSS) units. The HDB says land for some 8,000 of these could be launched this year. Why should the HDB be catering to the needs of this select group?

Look at what is happening to the estates that were built by the HUDC for an earlier group of the so-called sandwiched class. Some like Farrer Court, Amberville and Bedok Reservoir, have been sold en bloc to private developers. The remaining ones - Shunfu, Braddell Heights, Pine Grove, Laguna Park, Neptune Court, Chancery Court and Eunosville - have been privatised or are in the process of being privatised in anticipation of en bloc sales. Why must public funds be used to cater to such profiteering?

Rather than be all things to all people, the Government should concentrate on housing the masses.

by Conrad Raj
05:55 AM Jan 21, 2011

Conrad Raj is editor-at-large with Today.

Source: www.todayonline.com

by Joanne Chan

Updated 11:20 AM Jan 14, 2011

SINGAPORE - Executive condominiums continue to see strong demand from home buyers who have been shut out of the public housing market until recently.

Austville Residences in Sengkang, the latest development for sale and the fourth EC to have been launched after a five-year hiatus, had a queue of some 150 home buyers and their families forming even before doors opened for booking yesterday morning.

One reason: A first-come-first-served system to allocate the 540 units, unlike the previous three ECs, which used balloting.

Early birds arrived on Wednesday and waited overnight to get a shot at choice units. Some came prepared with mats and chairs, others simply stood in line. By 9am, the line had snaked past the showroom.

The first couple in line, who declined to be interviewed, said they arrived at 3pm on Wednesday.

Mr Levan Heng, who arrived three hours later and was seventh in line, said he was attracted to Austville because his parents and in-laws live nearby.

"I've already applied for a Build-To-Order flat and I've in fact paid some money - like $2,000. But I was thinking I might even forfeit that to get this," he said.

Property developer United Engineers said it decided on a first-come-first-served system because balloting left too much to chance for genuine buyers. It declined to disclose first-day sales numbers.

Project director Chua Kien Pin said: "We have keen buyers who have aspirations for, maybe, a unit on a high storey or good spacing. They're not really well taken care of in a balloting system. In a queue system, buyers can come early and get what they want."

Market watchers were not surprised by the queue for Austville, whose units are priced at $680 per sq ft on average.

Dennis Wee Group director Chris Koh said: "There's quite a group of people who can't afford private property, but then their salary is above $8,000, so they can't buy Housing and Development Board flats either."

He added that Austville has good attributes, such as proximity to the Light Rail Transit and a shopping centre.

With ECs available to households with a maximum income of $10,000, Mr Koh said: "You can say it's a long route to owning a private property. If you aspire to own a private property today but can't afford one, perhaps choose an EC and, in the years to come, when it gets privatised, you benefit."

Since ECs were relaunched, sales have been good. Esparina, which was launched in October, has seen a 92-per-cent take-up rate for its 573 units.

For the Canopy, rolled out in the same month, this figure stands at almost 60 per cent, while Prive in Punggol, which was launched last month, has reached its 75-per-cent mark.

Three EC sites in Choa Chu Kang, Tampines and Punggol will be up for tender in the first half of this year under the Government's Land Sale Programme.

Source: www.todayonline.com

Based on URA and HDB projections, there could be a deluge of homes in 2013 and 2014

by Ku Swee Yong

05:55 AM Jan 07, 2011
It was a week before last Christmas when we celebrated the Housing and Development Board's (HDB) completion of 1 million flats.

This is an awesome achievement. With 1 million flats averaging about 1,000 sq ft each, the HDB has within 50 years completed and handed over a billion sq ft of residential space. A billion sq ft. One, followed by nine zeros. That is more square footage than the above-ground portion of the Great Wall of China, which spans 6,500km.

Now, the actual number of HDB flats that exist today is just below 900,000. According to the HDB's annual report, as of March 31, 2010, there were 890,212 flats under management. More than 100,000 flats have been demolished since the '70s, many of them rental flats. Older estates, such as Brickworks and Queenstown, have been upgraded.

Over the years, small individual estates have also been amalgamated into towns such as Bukit Merah Town, Clementi New Town, etc, under various estates renewal programmes, such as Selective En bloc Redevelopment Scheme (Sers).

The completion of an average of 20,000 flats per year in the HDB's 50-year history was in tandem with the growth of Singapore's population.

In the last 15 years, from 1995 to 2010, population growth (Singaporean citizens and permanent residents) averaged 50,000 per year, accommodated by the growth of public (additional 13,950 flats a year) and private housing (8,593 units a year). This is an average of one apartment for every two to three Singapore citizens and PRs. If we included non-residents (Work Permit and Employment Pass holders, for example), then this is an average of one new HDB or private home for every four new people added to the "headcount" in Singapore.

Table 1 shows the actual supply of physical units versus population growth. The 15-year data looks balanced.

However, within the 15 years, there were several tumultuous periods. Early on, a long queue of up to five years for HDB flats formed due to a perception of supply shortage and rising prices. Executive Condominiums were introduced.

The massive construction boom around 1995, with fuel added by en-bloc deals, led to a massive increase of 44,000 residential units per year in the period spanning 1998 to 2000. This is net additional physical supply; that is, demolitions from en-bloc deals have reduced the total count.



THE SCOURGE OF SARS

The economy dipped in 2001 after the dotcom crash, which was followed by 911, Gulf War II, the Bali bomb blast, and then Sars. The blip during the Sars crisis was the worst: A recession with a population exodus of 61,000 in 2003, during which there was an accumulated excess of residential units.

By March 2004, HDB announced it would stop building five-room flats because it had 10,000 units that were waiting to be taken up. At that time, three-bedroom private apartments could easily be had at $500,000 and there was little demand from a population that shrank by 61,000.

The over-supply, apparent since 2001, brought on a revamp of the HDB and the introduction of the Build-To-Order (BTO) scheme. HDB flats will be constructed only when there are enough buyers, allowing the board to adjust supply based on demand from applicants.

In 2002, the registration for flats system was suspended and till today, the BTO scheme remains the main mode of HDB's sales. The Design, Build and Sell Scheme (DBSS) was introduced in 2005 for private sector developers to participate in public housing projects. This scheme contributes about 10 per cent of total new HDB supply.

The period of 2004 to 2005 was one of slow growth as there was excess supply which had to be absorbed by new demand from the population growth before equilibrium could be reached. Government Land Sales slowed down, leading to the next squeeze.



MARKET RECOVERS AMID EN-BLOC FEVER

From 2006 to 2008, real estate prices recovered on a combination of factors, including: (a) rapid population growth on the back of strong jobs creation; (b) rosy economic outlook spurred by the promise of the integrated resorts; (c) developers replenishing freehold land bank through en bloc transactions and (d) small number of project starts in 2003 to 2005 leading to low completion numbers in 2006 to 2008.

Of the above factors, the en bloc phenomenon created the biggest squeeze because it (a) demolished physical housing units to make way for redevelopment, reducing total stock; (b) put millions of dollars of windfall into the hands of the en bloc sellers, amplifying purchasing power, and (c) en bloc sellers had to buy another property for their own stay at a time when net new supply was already low.

The average growth of population in the last five years - from 2006 to last year - was 162,000 per year. The demand for housing was way higher than the net supply growth of private residential at 5,780 units per year and the additional supply of 2,129 HDB flats per year, partly due to Sers rejuvenation of older estates. The timing could not have been better.

If we narrowed our analysis down to the numbers for 2006 to 2008, the shortage of space is even more pronounced. Vacancies dropped to a low of around 4 per cent as the average annual increase of 4,077 units of private residential stock (TOP completions minus en bloc demolitions) and 1,858 units of HDB stock were hardly enough for the influx of population at 191,200 a year! Assuming the new population agreed to squeeze into residential units 10 people at a time, we would need a supply of 19,100 units each year in 2006 to 2008. But the additional stock count was only 5,935. So naturally, rentals and capital values spiked.



SUPPLY OUTLOOK

We need to look at the planning for physical supply and not merely the real estate market based on launches and pre-sales. Some schools of thought favour the idea that, in land-scarce Singapore, property investors merely care about capital gains, not the steady rental income stream. For me, I stress the importance of long-term returns from real estate and therefore, I keep a close eye on physical supply and asset utilisation.

A property has real value only when it is well-used. Most hard, capital-intensive assets are like that: Ships, aeroplanes, machinery, satellites, ports, highways, and so on. If you leaned towards feng shui, you would also believe that the higher the human traffic and goods flow (especially for industrial, retail and commercial properties), the better the property.

An over-supply of completed residential properties, with insufficient end-users and poor utilisation, would naturally lead to price weakness.

Conversely, insufficient supply or too-rapid a population or demand growth will lead to sky-rocketing prices - similar to the situation in 2007. This would not go down well with our central planners. Despite being a top-notch economy, Singapore does not like to price itself out of the market. So, we can expect more supply to quench the fire of rising prices.

Since the middle of 2009, public housing demand has been robust and prices have moved up sharply. From Table 2, we see that HDB launches of BTOs were ramped up significantly last year.



According to the HDB: "The ramp-up of flat supply is part of a series of additional measures to reinforce the Government's commitment to provide affordable and adequate public housing supply for first-timer households." If demand remains strong, the HDB may launch up to 22,000 BTO flats and release land for 7,000 DBSS units this year. That's a potential 29,000 HDB units. That's huge.

However, the numbers do not indicate when the physical supply will be completed. The HDB supplies new flats based on various demand factors, such as new households formed from marriages, number of resale transactions, etc. To satisfy the strong demand and in order to shorten the waiting time for first-time buyers, Mr Mah Bow Tan, the Minister for National Development, has announced that the HDB will endeavour to complete construction within two-and-a-half years, shorter than the previous average of three years, for all BTOs starting from September last year.

Based on the above information, public housing supply is estimated to be as shown in Table 3:



If we net out the number of HDB units that may be demolished for estate renewal, the supply looks comfortable, especially since most of the BTO flats have found owners before construction began.

However, if we look at the total supply of residential units (both HDB and private) as shown in Table 4, the numbers become somewhat scary.



If you recall from Table 1 above, the 15-year average annual supply is about 22,000 units of HDB and private housing. The recent record high Government Land Sales programme and the ramp up of HDB supply may lead to a supply of over 30,000 units in 2013 and 43,000 units in 2014.

The last time so many residential units were completed was during the period of 1998 to 2000, when an average 44,000 units were completed per year. That was a supply level that was challenging to absorb as new family formations through marriages tracked at around 25,000 per year and thepopulation increased at 70,000 per year. And not all newly-weds purchase homes or move out of their parents' nests, while new population may come in the form of students or contract workers who occupy dormitories rather than residential units.

That period of over-supply led to a long period of indigestion from 2002 to 2005, when prices stagnated on the back of an economy hit by Sars and external turbulence. Vacancies of private residential units hovered above 8 per cent for most of 2002 to 2005, much higher than the 5 to 6 per cent of 2009-2010.



WHAT MIGHT BE THE LEVERS TO PULL?

Should the Urban Redevelopment Authority's projections of residential completions be accurate and HDB supply remains high, we must brace ourselves for a deluge in 2013 and 2014. We are now in 2011, so that gives us over a year to prepare. There are, however, a few ways that may mitigate the over-supply threat:



- Speeding up estate renewal programmes

By 2015, there will be more than 200,000 flats that will be over 30 years old. Old flats could be torn down sooner. Current tenants will be given notice to move out into other HDB flats. However, HDB's pace of renewal programmes is not entirely clear to market watchers, so I would not be able to take a stab here.



- Slowing down construction

The HDB can choose to slow down the supply of new flats. In the case of BTOs, the process of applications, queueing, balloting, selection, etc, and then contracting the construction companies to build are within the control of HDB. If physical supply is high and vacancies increase, the completion of construction could be delayed for the market to take up some slack.



- Embracing more foreigners

The demand side of the equation could be jacked up by welcoming more foreigners to our shores. This is especially so if the economic growth in the next five years can hold up at 5 per cent or higher, ensuring that jobs growth will be robust. If executed well, an increase in housing demand produces the best outcome for the whole market.



It remains to be seen if the large supply can be supported by demand. It is critical for stakeholders to make informed decisions, thinking through a comprehensive set of real estate data such as housing demolitions, population growth policies, public and private housing TOPs, etc, to the extent that such information is available.



The writer is the founder of real estate agency International Property Advisor (IPA), which provides services to high-net-worth individuals.

Soure: www.todayonline.com

 

But rate of increase slowed, cooled by Government measures

by Joanne Chan
05:55 AM Jan 04, 2011

SINGAPORE - The red-hot resale market for Housing and Development Board flats saw prices go up by almost 14 per cent last year compared to 2009, according to HDB's flash estimates yesterday.

In comparison, prices went up by 8.2 per cent in 2009 compared to 2008.

But in a sign that the prices are cooling off, the rate of increase has slowed: Between October and December, the HDB Resale Price Index increased by 2.4 per cent, compared to 4 per cent in the third quarter.

The median Cash-Over-Valuation (COV) also fell $7,000 in the fourth quarter to $23,000, compared to the third quarter.

Over the same period, resale volume dipped by about 21 per cent to about 6,500 transactions.

Property analysts MediaCorp spoke to said the numbers point to a stabilising market, which had been cooled by measures introduced by the Government in August.

In particular, they noted that the new rule which disallowed private property owners to own a HDB flat at the same time has turned many away from the resale market.

Dennis Wee Group director Chris Koh noted that investors looking to profit from the resale market are thinking twice.

Said Mr Koh: "There has always been a group of people who buy and sell flats very regularly, every three to five years they change the address of their HDB flat. This group of people are also affected by the new measures ... They have to cough up 10 per cent cash, for example, instead of 5 per cent."

Analysts also attributed the decline in resale volume to the traditional year-end slowdown.

SLP International executive director of research and consultancy Nicholas Mak expects transaction volume to pick up in the first quarter of this year. Said Mr Mak: "There will be a slight increase but I don't think we will see a strong spike of above 10,000 units like what we've seen during the height of the HDB resale market boom."

Property firms attested to sellers asking for lower COVs.

Said Hersing Corporation senior group division director Mark Teo: "I believe the COV prices for the first quarter of this year are going to continue to go down further ... probably, by another $5,000 or $10,000."

Despite the falling COV, it will be a few more months before housing prices stabilise - as valuation is partly based on past transactions, Mr Teo noted.

The HDB reiterated that it has ramped up its new flat supply significantly to meet the demand from first-timer households. This year, it plans to offer up to 22,000 new Build-To-Order flats, subject to demand. Last year, the HDB offered 17,700 new flats under the BTO system and Sale of Balance Flats exercise.

Source: www.todayonline.com

by S Ramesh
05:55 AM Dec 23, 2010

SINGAPORE - The Housing and Development Board (HDB) has launched its last Build-To-Order (BTO) project for this year, the Punggol Topaz, with 1,010 standard flats. With the launch yesterday, the HDB would have offered 17,713 new flats under the BTO and Sale of Balance Flat exercise this year.

Punggol Topaz, located along Punggol Way and Punggol Field, comprises 184 three-bedroom units, 542 four-bedroom and 284 five-bedroom flats, with 95 per cent of the flats set aside for first-timers. The facilities there will include a supermarket, an eating house, shops, a child care centre and a Residents' Committee Centre.

The Punggol MRT/LRT station, bus interchange and future town centre are nearby. Tampines Expressway and Kallang-Paya Lebar Expressway are a short drive away.

In line with the HDB's plans to develop Punggol as an eco-town, Punggol Topaz is designed for Green Mark Certification.

The layout of blocks and units is oriented to minimise heat gain from the sun. It will have features such as dry ponds and rain gardens, which help to maintain the quality of surface run-off from rainwater before it is discharged into the drainage system.

Selling prices for the flats range from $166,000 to $207,000 for three-bedroom units, $267,000 to $329,000 for four-bedroom and $335,000 to $406,000 for five-bedroom flats.

PropNex corporate communications manager Adam Tan said: "Compared with our transactions in PropNex for November 2010, the prices for the 4-room and 5-room flats in Punggol Topaz are 25 per cent and 19 per cent cheaper than prevailing resale prices."

Next year, the HDB is prepared to launch up to 22,000 new BTO flats, if demand is sustained. It will launch about 5,000 BTO flats - in towns such as Bukit Panjang, Jurong West, Yishun and Sengkang - in the first quarter.

The next BTO launch in January will offer 1,700 flats in Bukit Batok and Yishun.

Source: www.todayonline.com

Published December 23, 2010


HDB launches 1,010 BTO flats in Punggol

By UMA SHANKARI

THE Housing & Development Board (HDB) yesterday launched another 1,010 new flats for sale in its latest build-to-order (BTO) project, Punggol Topaz.

Including this launch, HDB has now offered a total of 17,713 new flats for sale under its BTO and sale of balance flat exercises in 2010, it said.

And the agency will continue to roll out new supply at a steady rate next year. It plans to launch about 5,000 new BTO flats in the first quarter of 2011, including 1,700 flats in Bukit Batok and Yishun in January.

For the whole of 2011, HDB is prepared to launch up to 22,000 new BTO flats if demand is sustained, it said.

Punggol Topaz, located along Punggol Way and Punggol Field, comprises 184 three-room, 542 four-room and 284 five-room standard flats. Some 95 per cent of the flat supply will be set aside for first-timer households.

Selling prices range from $166,000 to $207,000 for a three-room flat; $267,000 to $329,000 for a four-room flat; and $335,000 to $406,000 for a five-room flat.

In line with HDB's plans to develop Punggol as an eco-town, Punggol Topaz is designed with eco-friendly features to receive Green Mark certification.

PropNex expects the attractive pricing of the flats to be the biggest pull factor for potential applicants.

Based on transactions handled by the property firm in November 2010, the prices for four-room and five-room flats in Punggol Topaz are 25 per cent and 19 per cent cheaper than prevailing resale prices.

'Despite the slight drop in median resale prices in Punggol since 3Q10, this still translates to a hefty price difference and greater affordability for the BTO flats in Punggol Topaz,' said PropNex corporate communications manager Adam Tan.

He expects strong demand for the new flats due to the current popularity of Punggol - even though the number of new flats introduced by HDB this year is at a high of almost 18,000.


Source: www.businesstimes.com.sg

BTO project in Punggol launched
By S Ramesh | Posted: 22 December 2010 1234 hrs

SINGAPORE: The Housing & Development Board (HDB) has launched another Build-To-Order (BTO) project - the Punggol Topaz with 1,010 standard flats - in Punggol.

HDB said 95 per cent of the flat supply would be set aside for first-timer households.

With the launch on Wednesday, HDB would have offered a total of 17,713 new flats for sale under the BTO and Sale of Balance Flat exercise in 2010.

Punggol Topaz, located along Punggol Way and Punggol Field, comprises 184 units of three-room, 542 units of four-room and 284 units of five-room flats.

Facilities to be provided at this development include a supermarket, an eating house, shops, a child care centre, and a Residents' Committee Centre.

Other facilities available in Punggol town to serve the future residents include the nearby Punggol MRT/LRT station, bus interchange, and the future town centre.

The Tampines Expressway (TPE) and Kallang-Paya Lebar Expressway (KPE) are a short drive away, offering good connectivity to the rest of Singapore.

In line with HDB's plans to develop Punggol as an Eco-Town, Punggol Topaz is designed for Green Mark Certification, with eco-friendly features.

The layout of blocks and units is oriented to minimise heat gain from the sun.

It is designed with ecologically friendly features such as dry ponds and rain gardens that help to maintain the quality of surface runoff from rainwater before it is discharged into the drainage system.

The selling prices for the flats range from S$166,000 to S$207,000 for a three-room flat, S$267,000 to S$329,000 for a four-room flat and S$335,000 to S$406,000 for a five-room flat.

For 2011, HDB said it is prepared to launch up to 22,000 new BTO flats, if demand is sustained.

In the first quarter of next year, HDB will launch about 5,000 BTO flats. These BTO flats will be located in towns such as Bukit Panjang, Jurong West, Yishun and Sengkang.

The next BTO launch in January 2011 will offer 1,700 flats in Bukit Batok and Yishun.

- CNA/wk

Source:/www.channelnewsasia.com

by Ong Kah Seng 05:54 AM Dec 17, 2010

Gone are the days where size matters for home seekers. Smaller apartments are making their presence. In the public housing sector, 3-room and studio flats have been re-introduced in new Build-to-Order HDB projects, while new private residential offerings seem to be increasingly smaller, yet popular.

Colloquially referred to as "Mickey Mouse" or "shoebox" apartments, there has been an increased demand for such residential units. The year 2007 saw a spike in sales of units smaller than 500 sq ft, from an almost inexistence to 325 units.

The story continued from there, to 883 transactions last year. While it can be argued that last year was a recession year and therefore small apartments found favour among financially cautious buyers, the heightened interest in shoebox units this year seems to confirm the growing penchant for smaller apartments. This year, a total of 1,421 such units have so far been transacted.



Why the popularity?

To examine why shoebox units have become popular, one must look at the private residential sector in the form of sales activity, pricing trends and product offerings in recent times.

The private residential sector has created various market participants who entered and exited at the right time to achieve tidy profits, reflecting success stories from property transactions. This spurred many other aspiring private home buyers to quickly proceed with a purchase.

However, while one recognises the opportunity from property investments, there are often limitations in one's financing capabilities. Gaining entry into the property game is but a dream unless one has accumulated sufficient funds to make a purchase.

Shoebox apartments are hence a feasible option for interested participants who find it increasingly difficult to own a sizeable piece of private property as prices have continued to escalate. For one, the upfront capital and overall cost of shoebox apartments are smaller and more affordable.

For another, the cost of a shoebox apartment will at most be comparable to that of a larger HDB flat. For a private residential property owner, there is more flexibility in home ownership and re-selling his unit.

Developers who saw this trend were quick in pushing out such projects amid the scarcity. The response has been encouraging and the resale demand for such properties has further reflected the overwhelming interest.



Understanding Challenges

Potential buyers of shoebox apartments need to know that the tenant base for such housing is more restricted than ordinary apartments. Prospective tenants are likely to have significant budget constraints and are often either local professionals or junior expatriates on partial housing allowances.

Some of these tenants may also prefer an HDB flat as it is more spacious for a rent that is lower than that of a shoebox apartment. Companies are unlikely to accommodate upper-middle and senior expatriates in shoebox apartments, who have specific housing requirements. A shoebox apartment will not reflect well on the company, which may in turn affect career and relocation decisions.

Also, living in a shoebox apartment may not be entirely cost effective. Some occupiers may find that there are limited activities within the confined space and prefer hanging out, incurring more entertainment expenses. The real costs of living may be higher than expected.



Relevance for shoebox apartments

Although there are challenges in investments, it does not necessarily reduce the appeal of shoebox apartments. As home buyers are becoming cautious and refraining from buying apartments beyond their reach, shoebox apartments can be smaller, realistic purchases that minimise liquidity risks. Buyers are also able to channel the rest of their funds to other areas, such as travel or enrichment programmes.

There is a potential for shoebox apartments to become more popular among homebuyers. Small sized apartments are common in major cities in the world where properties are costly.

With Singaporeans increasingly exposed to overseas city living, many may become more open to living in confined premises so long as there is privacy and an opportunity to host small gatherings.

The success of the new developments can also potentially create a structural shift in housing preferences and living patterns.

Perhaps a key merit of shoebox apartments for investors is that the tenant does not have to share an apartment with others, including strangers and acquaintances. This minimises friction arising from different lifestyles among occupiers.

Shoebox apartments are also effective solutions to singles who may find regular size housing beyond their means. A single can only buy an HDB resale flat if he or she is at least 35 years old.

Shoebox apartments offer privacy for singles who are not only financially independent but are long psychologically ready for independent living.

A shoebox apartment, in this case, will be bought for owner occupation rather than for pure investment.

Consider the option carefully

The fact is that hardly any property can offer the perfect fit. A cost-effective property usually cannot provide the maximum benefit from both investment potential and capital appreciation standpoints. What is essential for a buyer is to be clear about the motivation in the property purchase - is it for investment or owner occupation?

When prudence is exercised in the home-buying decision, a shoebox apartment can be a worthwhile purchase, offering the opportunity to enjoy privacy and a potential for capital appreciation in sync with the sustained economic recovery.



The writer is senior manager, Research at Cushman & Wakefield.

Source: www.todayonlin.com

by Mah Bow Tan

05:55 AM Dec 10, 2010

Over the last few months, I have explained in this series of commentaries how the Government provides affordable housing for the majority of Singaporeans, and how these flats are not only a home, but also an asset which grows in value to support social mobility and provide for old age.

Many readers have said they now understand the issues better and agree with the hard choices that the Government has to make. But some others have disagreed with the Government's policy. I welcome this debate on our public housing system. It will help us improve.

But let us do so with an open mind, and a full understanding of the facts. Dr Goh Keng Swee used to quote the Chinese saying, "Seek truth from facts". Let us heed these words of wisdom as we address the people's concerns.



FLAT SUPPLY: HOMES FOR THE MASSES

One of these concerns relates to flat supply: "Why is there a need for the Housing and Development Board (HDB) to build premium flats which are priced higher? Why not just go back to basic flats?"

To answer such questions, let us start with the Government's basic principle, which is to provide affordable public housing for the vast majority of Singaporeans - not just for 10 or 20 per cent, like most countries, but up to 80 per cent of the population.

So the HDB has to build flats that cater to the diverse budgets and aspirations of many - from households earning $1,500 a month at one end to those earning $10,000 a month at the other.

The fact is that demand for premium flats is strong. When the premium project, Waterway Terraces, was launched in Punggol, there were 13 applicants per flat. This was two to three times the application rate seen for standard Build-To-Order (BTO) projects launched in Punggol in the same year.

Nonetheless, premium flats form only a small portion of the flats offered by the HDB. Most of the flats built by the HDB are standard flats, of good quality, and come in a wide variety of sizes and locations. Through the provision of both standard and premium public housing projects, the HDB encourages Singaporeans from a wide spectrum of incomes and backgrounds to live together to form an inclusive community.

FLAT PRICING: AFFORDABILITY IN AN EQUITABLE AND SUSTAINABLE WAY

The next area of concern is on pricing of flats. Some have asked: "Why market-based pricing? Is the HDB making a profit at the expense of affordability?"

To answer this, we must remember that another basic principle of Singapore's public housing is to build homes for our people to own, and not rent. Owning an HDB flat gives Singaporeans an asset that grows in value along with the country's progress. We must allow this value to be realised upon the resale of the flat in the open market.

But to ensure affordability for first-time homebuyers, we price new flats at a subsidy. The HDB also helps first-timers buy resale flats of their choice with the CPF Housing Grant. The subsidy must be set relative to market values so that all flat buyers enjoy comparable levels of subsidy.

In contrast, a cost-based system means that the same price would be charged for different flats in the same project, regardless of their location, floor, direction, and other attributes. It would be unfair for the buyer of a second-floor unit to be charged the same price as a 40th-floor unit with an unblocked view, because the latter would clearly fetch a much higher resale value.

For equity and the efficient allocation of resources, the selling price of flats must therefore be linked to their value, not their cost.

Some have contended that with the market-minus pricing, the HDB is making money from Singaporeans. This is quite wrong. Every year, the HDB publishes its audited financial accounts. In these accounts, the HDB's proceeds from the sale of new flats are shown to be far below what it costs the HDB to build them. Over the last three years, the average loss on the sale and development of HDB flats was about $600 million a year.

For example, for standard BTO projects like Punggol Spectra and Fernvale Crest, the cost subsidy per family averaged $40,000 to $60,000. If we add other housing subsidies such as the CPF Housing Grant and Additional CPF Housing Grant (AHG), the HDB's total subsidy for first-time buyers comes to $1 billion a year. This is a real subsidy which has to be paid by the State.

Besides providing extensive subsidies, the HDB also offers a range of flat options to cater to different budgets. As shown in the table above, buyers at each income level can choose from a wide range of flat types that are affordable to them.

More importantly, what is the reality on the ground? Here are the facts. More than eight in 10 Singaporeans live in HDB flats. Of these, 90 per cent own their flats, and the rest rent. Of those who own, 40 per cent have fully paid for their flats.

An average of 15,000 first-timers buy new or resale HDB flats every year with a Government subsidy. New flat buyers use only 20 per cent to 25 per cent of their income to pay for their loans; and more than 80 per cent rely only on CPF and no cash to finance their loans. Among new BTO flat applicants, about 35 per cent apply under the Fiance/Fiancee scheme, and the median age of these young couples is about 26 years old.

Is there any other major city or country that is doing this for their young people?



NO EASY ANSWERS

I totally understand the concerns about housing supply and affordability, given the recent run-up in property prices. This is a problem of success. Prices have risen because the economy has improved, people have good jobs, and there is confidence in our future.

When flat prices appreciate, homeowners benefit but homebuyers worry. To help first-time homebuyers, the HDB has increased the supply of new flats and given out generous housing subsidies. Can we increase housing subsidies further? And should we? Increased subsidies come at a cost; what would Singaporeans have to give up?

Some have suggested cutting the defence budget. Others say we should under-price the land for public housing. But will these moves have serious repercussions on stability and the security for our children? Given the limited space in Singapore, will artificially under-pricing land encourage excessive consumption and reduce what future generations can enjoy?

As a responsible Government, we must look after Singapore's long-term interests and guard against easy and populist suggestions. If we adopt short-sighted measures, we undermine the fundamentals that have brought us stability, prosperity and progress. This is what we really cannot afford.

The writer is the Minister for National Development.

Source: www.todayonline.com

Published November 19, 2010


THE Housing & Development Board (HDB) yesterday offered 1,176 new flats at Yishun - and plans to roll out another 1,010 at Punggol next month.


This takes the number of new units under the build-to-order (BTO) and sale-of-balance flat schemes this year to about 17,700.

The latest flats in Yishun are under the BTO programme. The estate, Yishun Greenwalk, is bounded by Yishun Ring Road, Yishun Avenue 6, Yishun Avenue 9 and a canal linked to Sungei Khatib.

The estate is near Yishun MRT station, Yishun bus interchange and Northpoint shopping centre.

It is also near educational facilities such as Northland Secondary School and Chongfu Primary School. Also in the vicinity are Khoo Teck Puat Hospital, Yishun Park and Safra Yishun Country Club.

Of the 1,176 new units, 112 are three-room flats, 602 are four-room flats and 462 are five-room flats.

The five-room units are priced at $298,000 to $365,000. According to HDB, a comparable five- room resale flat in the vicinity would cost $398,000 to $432,000. The deadline for flat application is Dec 1.

Real estate agency PropNex expects Yishun Greenwalk to be popular with home seekers. Units in the estate could be four times subscribed, said spokesman Adam Tan.

Because the site is within walking distance of Yishun MRT station and near to schools, it is particularly suitable for couples looking to start a family in the next few years, he said.

Source: www.businesstimes.com.sg

Recently, the Housing and Development Board was conferred the UN-Habitat Scroll of Honour Award - the most prestigious human settlements award in the world. In recognising Singapore's achievement, the UN-Habitat Chief of Information Services said: "It's really quite impressive for a country to provide adequate shelter and home ownership for so many."

Ask most housing experts and observers, and they will say that HDB flats remain within reach of the majority of Singaporeans. After all, HDB builds and sells flats at heavily-subsidised prices to ensure affordability. This has made it possible for an average of 15,000 young couples every year to join the ranks of homeowners.

Most of these couples buying new flats use just 20 to 25 per cent of their monthly income to pay for their flats. With their CPF contributions, few have to pay any cash for their mortgage payments. In total, more than 80 per cent of Singaporeans live in 900,000 HDB flats today. Yet, people still worry that HDB flats are not affordable. Why are there such sentiments?

Indeed, housing affordability - whether a flat is within financial reach - is not a straightforward issue. Different people have different notions of what is "within reach". Some argue that a 30-year housing loan is too long for a flat to be considered affordable. Others say that flat prices are much higher compared to their parents' time. The debate is further complicated by rising aspirations - whether housing is "within reach" also depends on what we aspire towards.

For a meaningful discussion on affordability, we need objective and commonly accepted yardsticks. So, what are the measures of affordability? How does HDB ensure that flats remain within reach of Singaporeans?



MEASURES TO ENSURE AFFORDABILITY

Focus on first-timers. To ensure that first-time buyers have access to affordable housing, we do several things. First, HDB prices its new flats below market value, taking into account the income of homebuyers. Hence, first-timers enjoy a substantial subsidy when they buy new flats from HDB.

Next, for first-timers who cannot wait for a new flat or wish to buy a specific flat in a specific location, HDB provides a CPF Housing Grant of $30,000 (or $40,000 if they stay near their parents) to buy a resale flat. Beyond that, new and resale flat buyers can apply for a concessionary loan. For a $200,000 loan over 30 years, the interest subsidy amounts to about $30,000.

Help according to income. For households earning $5,000 or less a month, an Additional CPF Housing Grant of up to $40,000 is provided for their purchase of new or resale flats. In other words, a family earning $1,500 can get as much as $80,000 in housing grants. Families earning more, between $8,000 and $10,000, can now buy new flats under the Design, Build and Sell Scheme (DBSS), in addition to Executive Condominiums, and enjoy a CPF Housing Grant of $30,000.



MEASURES OF AFFORDABILITY

I have been discussing affordability in layman's terms. Let me now get into the technical stuff. In particular, how do experts determine housing affordability? There are a few generally accepted benchmarks.

Income affordability. One is the housing price-to-income ratio (or HPI), which compares median house price to annual household income.

In a Straits Times article in February 2010, two NUS professors, Tu Yong and Yu Shi Ming, noted that Singapore's HPI for resale flats in non-mature estates is 5.8, compared to Hong Kong's 19.8 and London's 7.1. That means Singaporeans generally need 5.8 times of their annual household income to buy a resale flat in non-mature estates, whereas a Hong Kong resident needs more than three times that amount.

If we take Department of Statistics 2009 data on the median income of younger households - those aged between 25 and 35 years old - who are likely to be first-timers, their HPI is even lower, at 4.5 for resale flats and 3.8 for new flats. This is because they have higher incomes than average households.

Financing affordability. While the HPI is relatively easy to understand, it does not consider factors like loan availability and financing costs, which are important for many deciding to buy a flat. Therefore, another widely-accepted measure is the debt-service-ratio (DSR), which looks at the proportion of the monthly income used to pay mortgages.

The DSR for new HDB flats in non-mature estates, based on an industry norm of a 30-year loan, averaged 23 per cent this year. This is well within the 30-35 per cent international benchmark for affordable expenditure on housing.

Depending on flat type, the DSR ranged from 11 per cent for standard flats to 29 per cent for premium projects like the Punggol Waterway Terraces, which cater to higher income households.

We must also remember that CPF savings can be used for the initial downpayment and monthly instalments. Hence, more than 80 per cent of new flat buyers pay for their housing loans entirely out of CPF, without having to touch their take-home pay.

Whichever objective measure we choose, it is clear that there are enough HDB flats within reach of today's homebuyers. They range from smaller, no-frills flats in non-mature estates to premium flats in mature estates, catering for different aspirations and budgets (see table above). I hope buyers choose carefully, taking into account their budgets and aspirations. Housing affordability is decided not just by the options offered by HDB but also the choices of homebuyers.


BALANCING HOMEBUYER AND TAXPAYER INTERESTS

I can understand the anxiety among young couples wanting to buy a flat of their choice, within their budget, and as soon as possible. HDB has ramped up supply significantly and recently introduced more measures to temper excessive exuberance in the market and to moderate prices.

HDB also regularly reviews its subsidies to ensure affordability. But I must caution that there are limits to how much we can increase subsidies, without compromising other interests.

In other words, we must also consider affordability from a national standpoint. If we increase housing subsidies, what would we have to give up? The quality of education for our children? Healthcare services for our parents? Or do we impose a higher tax burden on Singaporeans?

There are no easy answers. Ultimately, we need to balance the interests of affordability for homebuyers and the burden on taxpayers.

by Mah Bow Tan
05:55 AM Nov 12, 2010


The writer is the

Minister for National Development.


Source: www.todayonline.com

Published October 27, 2010

HDB launches BTO projects in Bukit Panjang and Sengkang

A total of 1,322 units will be offered in the two projects

By UMA SHANKARI

THE Housing & Development Board has launched two more build-to-order (BTO) projects - Senja Parc View at Bukit Panjang and Anchorvale Horizon at Sengkang.

A total of 1,322 units - comprising 240 studio apartments, 112 two-room flats, 112 three-room flats, 710 four-room flats and 148 five-room flats - will be offered.

Including these, HDB has now offered 15,527 new flats for sale under the BTO and sale of balance flat exercise this year.

And in the first quarter of next year, it will launch about 5,000 BTO flats as part of the supply of 22,000 new flats planned for 2011.

The upcoming BTO projects will have a good geographic spread, in towns such as Bukit Panjang, Jurong West, Sengkang and Yishun, HDB said yesterday.

Apartments at the 577-unit Senja Parc View, which is bounded by Senja Road and Kranji Expressway, are priced at $86,000 to $119,000 for a two-room flat; $149,000 to $191,000 for a three-room flat; and $242,000 to $312,000 for a four-room flat.

Flats at the 745-unit Anchorvale Horizon, located at the junction of Anchorvale Road and Sengkang East Way, are pricier as they are 'premium' flats.

Units there will sell for $75,000 to $104,000 for a studio apartment; $277,000 to $344,000 for a four-room flat; and $344,000 to $426,000 for a five-room flat.

HDB estimates that first-time flat buyers will use 17 to 27 per cent of their monthly household income to meet their monthly loan payments for flats in Senja Parc View and Anchorvale Horizon.

Market watchers expect Anchorvale Horizon to be more popular.

'The immediate area around Anchorvale Horizon is more developed than the immediate area around Senja Parc View,' said PropNex corporate communications manager Adam Tan.

He pointed to various sports facilities that will appeal to the younger generation and the connectivity offered by the nearby expressway and LRT stations.

At Senja Parc View, the main attraction is expected to be the low cost of the flats.

http://www.businesstimes.com.sg

A total of 1,322 units will be offered in the two projects

By UMA SHANKARI

THE Housing & Development Board has launched two more build-to-order (BTO) projects - Senja Parc View at Bukit Panjang and Anchorvale Horizon at Sengkang.


A total of 1,322 units - comprising 240 studio apartments, 112 two-room flats, 112 three-room flats, 710 four-room flats and 148 five-room flats - will be offered.

Including these, HDB has now offered 15,527 new flats for sale under the BTO and sale of balance flat exercise this year.

And in the first quarter of next year, it will launch about 5,000 BTO flats as part of the supply of 22,000 new flats planned for 2011.

The upcoming BTO projects will have a good geographic spread, in towns such as Bukit Panjang, Jurong West, Sengkang and Yishun, HDB said yesterday.

Apartments at the 577-unit Senja Parc View, which is bounded by Senja Road and Kranji Expressway, are priced at $86,000 to $119,000 for a two-room flat; $149,000 to $191,000 for a three-room flat; and $242,000 to $312,000 for a four-room flat.

Flats at the 745-unit Anchorvale Horizon, located at the junction of Anchorvale Road and Sengkang East Way, are pricier as they are 'premium' flats.

Units there will sell for $75,000 to $104,000 for a studio apartment; $277,000 to $344,000 for a four-room flat; and $344,000 to $426,000 for a five-room flat.

HDB estimates that first-time flat buyers will use 17 to 27 per cent of their monthly household income to meet their monthly loan payments for flats in Senja Parc View and Anchorvale Horizon.

Market watchers expect Anchorvale Horizon to be more popular.

'The immediate area around Anchorvale Horizon is more developed than the immediate area around Senja Parc View,' said PropNex corporate communications manager Adam Tan.

He pointed to various sports facilities that will appeal to the younger generation and the connectivity offered by the nearby expressway and LRT stations.

At Senja Parc View, the main attraction is expected to be the low cost of the flats.

Published October 27, 2010

http://www.businesstimes.com.sg

Published October 22, 2010

It plans to launch up to 22,000 BTO flats in 2011 if strong demand persists


By EMILYN YAP

THE Housing and Development Board (HDB) will continue to roll out new flats through the build-to-order (BTO) programme every month even as the application rates for recent launches slide.


HDB CEO Cheong Koon Hean said this at a briefing on the board's FY09/10 annual report on Wednesday, which showed resale transactions between April 2009 and March this year reaching a seven-year high.

'We are still committed to launch every month, but we will monitor carefully. The programme can be adjusted,' Mrs Cheong said.

HDB ramped up its BTO programme from late last year to cater to rising demand for flats.

It was common to see launches in the early months of this year attract six to seven applications per unit offered.

But application rates have dropped after the government introduced measures to cool the property market in August.

Last month, a BTO exercise at Yishun attracted around 2.4 applications for every flat offered. Another exercise this month at Woodlands saw a rate of 2.2 applications.

'It is probably too early to really tell what is the impact of the measures,' Mrs Cheong said.

In any case, the BTO programme allows HDB to gauge demand for flats and adjust supply accordingly, she stressed.

This calendar year, HDB will be launching about 16,000 BTO flats - the highest number offered in any calendar year since it adopted the BTO system in 2002. Last year, it released 9,000 BTO flats.

HDB plans to launch up to 22,000 BTO flats in the next calendar year if strong demand persists.

There was robust appetite not just for new flats, but also for resale flats.

HDB revealed in its annual report that there were 39,320 resale applications in FY09/10. This is the highest number seen since FY02/03, it told BT.

HDB also said that the average number of resale transactions in recent years has been fairly constant at about 30,000. In FY08/09, it received 28,551 applications.

For FY09/10, HDB incurred a deficit of $907 million, less than the deficit of $2.12 billion a year ago.

The improvement was driven by a sharp drop in net operating expenditure, to $3.94 billion from $5.15 billion.

HDB's residential ancillary functions arm narrowed its deficit to $64 million from $120 million.

This was largely due to an increase in season parking income and licence fees received for car parks outsourced to external service providers.

HDB said that season parking income rose because there were higher season ticket sales from a larger car population.

It also outsourced more car parks to private operators, which generated higher licence fees.


http://www.businesstimes.com.sg

Updated 03:50 PM Oct 01, 2010
by Mah Bow Tan

The property market has a history of repeating itself. I guess that is why they call it the property cycle. There is a huge clamour for flats today, and we can't seem to build flats fast enough to satisfy demand. Yet, when I became Minister for National Development in 1999, one of my first challenges was to deal with an overhang of more than 31,000 unsold flats.

Almost every year, until 2006, Members of Parliament expressed their concerns in Parliament about the unsold stock, and asked what steps the Housing and Development Board (HDB) was taking to clear it. The Auditor-General's Office, too, urged the HDB to reduce its unsold stock, highlighting the high cost of holding vacant flats. The HDB had to come up with all sorts of ways to clear the flats - converting five-room and executive flats into smaller two- and three-room ones, organising roadshows, implementing walk-in selection of the ready flats, and engaging managing agents to rent out unsold flats temporarily.

One may argue that the Singapore of today is very different. But the huge oversupply experience not so long ago taught us many valuable lessons - that oversupply is as bad as undersupply, and that we need to manage the building programme carefully, including allocating new flats in a fair, cost-effective and efficient way.

There are essentially three ways to allocate a scarce resource like housing: By price (that is, highest bidder gets it), by queue (that is, first-come first-served), or by ballot (that is, draw lots). Allocating by price is basically the way resale flats are bought and sold in the free market. The buyer who offers the highest price gets the flat.

While this is most efficient, the drawback is that prices can be volatile and the lower income may lose out. So, for new flats, the HDB has adopted either a queue system or ballot system.



QUEUE SYSTEM

In the past, the HDB allocated flats on a first-come first-served basis. The HDB built flats assuming that everyone in the queue was a serious buyer who would book a flat eventually when his turn came. This was a reasonable assumption in earlier years, as there was a great housing shortage. The resale market was relatively undeveloped and the HDB was the predominant source of housing.

However, as we progressed from a nation of home-seekers to home-owners, the situation changed. Demand became more volatile. Many, even those with existing roofs over their heads, could now easily join or exit the queue. At the height of the property boom in the mid-90s, there were as many as 150,000 buyers in the queue, and the wait for a flat was as long as seven years. However, when the Asian Financial Crisis struck in 1997, the queue vanished, literally overnight. The HDB ended up with 31,000 unsold flats, which took more than five years to clear.

Because of the unintended oversupply, home buyers could walk in to buy ready flats in the early 2000s. However, home owners paid a heavy price, with flat prices staying depressed. Some who bought flats just before the crisis ended up with negative equity and even lost their homes and hard-earned savings. The many unsold flats represented a waste of taxpayers' money. The holding cost incurred was money that could have been spent on healthcare, education, or other areas.



BUILD-TO-ORDER (BTO) SYSTEM

In 2002, the HDB switched to the BTO system to better respond to demand that was becoming more sentiment-driven. Under this system, buyers ballot for the chance to select a flat. Certain groups, such as first-timers and those applying to live near their parents, are given extra tickets in the ballot to increase their chances of getting a flat. Ninety-five per cent of the flat supply is set aside for first-timers (corrected at 3:40PM, Oct 1). Buyers have to pay a downpayment to secure a booking. Each booking represents a committed buyer. The HDB proceeds to build when the majority of flats are booked. Flats are ready for occupation within three years of booking. Next year, this will be reduced to two-and-a-half years for a typical project. Couples who wish to shorten the waiting time further can apply under the Fiance-Fiancee scheme.

With better matching of supply and demand, the BTO system prevents a major supply overhang. It also allows the HDB to retain a small rolling buffer of a few thousand balance flats, which minimises holding cost to taxpayers. When demand is high, as it is now, the number of BTO projects is stepped up. Today, over nine in 10 first-timers get to select new flats within three tries.

Nonetheless, there may be a small number who are unlucky in balloting exercises. I understand their frustration. I have therefore asked the HDB to look into increasing the chances further for those with multiple unsuccessful applications.

However, many of the cases I see are not as "unlucky" as they claim to be. Recently, a Mr Ng wrote to me saying that he had balloted unsuccessfully more than six times. "Unlucky couples like me will never ever have a chance to purchase a flat under the BTO system", he said. When I asked the HDB to check, I was told that Mr Ng had in fact been given four chances to select a flat but did not do so. When this was highlighted to him, Mr Ng acknowledged that he had not selected "due to unavailability of suitable units". When I probed further, the HDB told me that on most occasions, there were many units available for him to choose from.

While Mr Ng has every right not to select and wait for his ideal flat, I hope he understands that the HDB cannot accede to his appeal to be given priority in future BTO exercises. Indeed, to be fair to those who genuinely need a flat, the HDB has since 2008 removed for one year, the first-timer status of those who have rejected two chances to book a flat.



BALANCING DIFFERENT INTERESTS

Each method of allocating flats has its pros and cons, and may be right for different circumstances. No one system will please everybody. The BTO system is by no means perfect but it is the most appropriate system for the moment, balancing the need for fairness, prudence and efficiency. We will continue to monitor and tweak it as we go along.

We remain committed to our mission of supplying enough flats, of good quality and at affordable prices, as quickly as possible to home buyers. But, we must do so in a way that does not create problems of oversupply for home owners and taxpayers down the road. We must remember the lessons of the past even as we address the housing needs of today.

The writer is the Minister for National Development.

Mah Bow Tan
The writer is the Minister for National Development

Source: http://www.todayonline.com

KELVIN TAY looks at how the new measures introduced by the government will affect residential property prices here

Published September 23, 2010
KELVIN TAY


THE 1980s witnessed one of the most spectacular property bubbles in modern history. It was brought on by a combination of a buoyant Japanese economy, the forced appreciation of the Japanese yen by virtue of the 1985 Plaza Accord, and low interest rates. The mixture was so potent that, at its height in 1989, prime properties in Tokyo's Ginza district were being sold for $125,000 per square foot (psf).


In 1991, the Japanese property market bubble burst spectacularly and almost 20 years later, the market remains moribund. More recently, the collapse of the US housing market brought capitalism to its knees in October 2008, with the resulting de-leveraging ramifications still being felt in the global economy almost 24 months later.

Although some market observers are still debating whether there is a bubble in the Singapore property market and therefore a need for price stabilisation measures, the fact that there is such debate is already proof of a pie in the making. As of the second quarter of this year, the HDB resale price index was 18 per cent above its previous peak in 1996. Prices in the mass market segment of the private residential market are as much as 23 per cent above its previous peak in 1996 as well.

In fact, the HDB resale and mass market segments may currently be in a state of denial - that prices will keep rising forever, a fundamental myth of asset bubbles. During a bubble, people generally believe prices would not fall. Although this has been proven wrong so many times in the past, many have not learnt from the past. And very often, homeowners are often the biggest victims of any property bubble.

It is with these thoughts in mind that we view the latest round of government policies to stabilise property prices in Singapore with relief. This is especially so as the recent run-up in property prices in Singapore has been concentrated largely in the HDB resale and mass market segments of the private residential market, where the majority of Singaporeans reside.

Most of the policies that were introduced three weeks ago are targeted at the HDB resale market, which in turn underpins prices in the mass market segment of the private residential market. Any decline in HDB resale prices will in turn affect the private mass market segment and vice-versa. The measures are broad-based, targeting both market demand and supply, with the 'demand' focused measures largely aimed at reducing speculative demand.

For example, buyers with a second mortgage now require a higher down payment of 30 per cent (previously 20 per cent), while the minimum cash payment has been increased to 10 per cent (previously 5 per cent). In our view, these two measures are likely to seriously dampen the HDB dweller's enthusiasm to upgrade to private property at current prices, as it reduces affordability.

A typical HDB upgrader would be looking at purchasing a 1,200 sq ft apartment at $850 psf, or around $1 million. Assuming that the couple still has an existing mortgage for the HDB flat they are upgrading from, they would need to cough up at least $100,000 in cash to meet the 10 per cent cash requirement and fund the remaining $200,000 from their CPF accounts. If we include the usual renovation expenses of about $30,000, then the cash requirement becomes a rather prohibitive $130,000, or close to 11 months of the couple's monthly net median income of $12,000.

Over time, the increase in supply of Design, Build, and Sell Scheme (DBSS), Build-to-order (BTO), and executive condominiums (ECs) in the market will also affect prices of the HDB resale market as buyers have a greater choice of homes available.

Some of the latest measures also reversed a long-standing policy that sparked the previous upturn in the HDB resale market in the 1990s. Back in 1991, the Ministry of National Development allowed HDB flat owners who have passed the minimum occupation period (MOP) of five years to invest in a private property.

Subsequently in 1993, the HDB relaxed mortgage valuations from 1984 values to current values and also permitted funds in the CPF ordinary account to be used for mortgage payments. Arguably, these two landmark policy changes at that point in time started the strong upturn in the HDB resale market in the 1990s, with the market hitting a peak in Q2 1996 before turning down sharply as a consequence of the Asian financial crisis.

Part of the package of measures announced at the end of August now disallow home owners from concurrently owning a private and public property within the MOP.

We expect this tightening to have a meaningful impact on the HDB resale market, as this is likely to reduce volumes and moderate price appreciation, if any. The subsequent impact is a decline in the average cash-over-valuation (COV) of the HDB resale market, which currently hovers at an average of $30,000.

With all these measures targeting the HDB resale market, it is difficult not to envisage the mass market segment of the private residential market being impacted as the former acts as a firm price support and catalyst for the latter. The last year or so has seen the emergence of 'shoebox' apartments ranging from 350 to 650 sq ft in size.

These smaller apartments are usually the targets of speculators as the absolute financial outlay and commitment is smaller and not surprisingly, we believe these apartments are also likely to be among the first to decline as the HDB resale and private mass market segment takes a breather.

Ironically, the most effective 'policy' of the government in stabilising the property prices might be interest rates. The Singapore property market has never been an interest rate sensitive market until 2007 and our sense is that the average home buyer may not be sanguine about how interest rates would impact his mortgage payments.

Prior to 2007, most housing loan rates in Singapore were pegged to the banks' and finance companies' prime lending rates (plus a premium of one per cent), which not only tended to be much higher than the Singapore Interbank Offered Rate (Sibor) or Swap Offer Rate (SOR) but also usually stayed consistently high, regardless of how low the base rates were.

However since 2007, the bulk of home loans are now pegged to Sibor or SOR (plus a premium of 1.25 per cent). With Sibor at historically low levels (0.51 per cent as of Sept 16, 2010), mortgages are currently artificially low, making homes that were once out of reach based on the old lending rates very affordable. However, the current low Sibor rates will normalise at some point. It is just a question of when and how fast.

Have there been instances where Sibor behaved erratically? The Asian financial crisis was one such example. Sibor spiked to a high of 7.75 per cent before finally sliding to 1.9 per cent in December 1998. The average rate of Sibor during that 18-month period hovered at 4.9 per cent.

As Asia was fortunately not at the epicentre of the credit crisis in 2008, Sibor did not behave erratically but averaged around 1.3 per cent, almost three times the current rate of 0.51 per cent.

So what is the likelihood of the above scenario panning out? At this point in time, with the global economic recovery still wobbly, a high interest rate environment looks rather unlikely. The good news is that history has shown that there are usually several warning signs before a financial crisis engulfs an economy.

We are also hopeful that history would have taught the average Singaporean buyer not to overextend his debt like his Japanese and American counterparts, buying property that cost more than they could rationally afford because they assumed that values would only rise and interest rates would always remain at such levels. The bad news is that humans seldom learn from history.

The writer is chief investment strategist Singapore, UBS Wealth Management

Source: http://www.businesstimes.com.sg

05:55 AM Sep 17, 2010
by Mah Bow Tan

Recently, I received an appeal from a young couple who had applied for the first waterfront BTO project at Punggol Waterway Terraces. Seeing the high application rates, they were worried that the Housing and Development Board (HDB) was not building enough new flats and that prices would shoot up beyond their reach.

The couple commented: "We read in the papers that the number of new flats completed each year by the HDB has been lower than the number of marriages in recent years. This means that the HDB is not building enough flats for the new households."

This couple's concern may be shared by many Singaporeans. Let me explain why things are not so straightforward, and how the HDB plans its housing supply to fulfil both short- and long-term needs of the people.



PROVIDING AFFORDABLE HOUSING TO THE MASSES

Meeting first-timer needs. The Government's commitment remains clear and constant - to provide affordable housing to the masses. Today, eight in 10 Singaporeans stay in HDB flats.

To keep our commitment to future generations, the HDB must focus on helping young couples buy their first flats.

Supporting resale flat purchases. But this does not mean that we need to build a new flat for every new household. Why?

Because some households may buy resale flats instead of new flats for various reasons, such as location and flat type. The HDB supports them by providing a CPF grant of $30,000 to $40,000 and a loan subsidy. Those with lower income can also qualify for an additional grant of up to $40,000. Among first-timers, 30 to 55 per cent of them took up resale rather than new flats each year over the past decade.

Supplying new flats. After accounting for what is met through the resale market, the HDB then builds new flats to meet the housing needs, with more flats set aside for first-timers. In planning the housing supply, the HDB takes a comprehensive approach. It examines not just the marriage rate, but also factors like the inflow of permanent residents and foreigners, flats released into the resale market through deaths or emigration, and upgrading or downgrading by existing home owners.

Over the past 10 years, the HDB built and sold more than 100,000 new flats. This was equivalent to adding three new Toa Payoh towns. The resale market was even more active in the same period, supplying over 300,000 or three times more flats. Together, new and resale flats have met the long-term housing needs of Singaporeans.



MANAGING DEMAND FLUCTUATIONS

Fluctuating short-term demand. However, things are never so simple. While supply over the medium term is roughly aligned with projections, housing demand in the short term can be much more volatile. Home buyers will adjust their purchases, depending on the economic outlook and market sentiments. When prices are low, buyers hold back, hoping it will go down further. Conversely, when prices are high, more buyers may come forward, worried that they may miss the boat.

So, while marriages among Singaporeans eligible for public housing stayed largely unchanged over the past decade at about 16,000 per year, demand for subsidised housing from first timers fluctuated between 12,000 and 19,000 per year over the last decade. Total transactions in the HDB market varied even more sharply during this period, ranging from about 37,000 to 58,000 transactions annually.

Avoiding an over-supply. If the HDB were to fly on auto-pilot and supply a fixed number of flats every year, regardless of market conditions, there would be the risk of an over-supply in some years. For example, between 2002 and 2006, resale flat prices had remained largely flat.

If the HDB had pressed on with housing supply based on long term projections, then flat prices for the over-800,000 existing home owners could have been depressed further.



RESPONDING TO RISING VOLATILITY

Managing unprecedented changes. The market changes over the past year or so have been especially challenging to anticipate. As late as May last year, the International Monetary Fund was predicting a "long, severe recession" for Asia.

Surprisingly, the number of new immigrants to Singapore actually increased during the downturn, as economic activities recovered quickly.

Equally important was the impact of sentiment. Property prices tapered off in the first half of last year, even though there were many foreigners here. But prices picked up sharply not only in Singapore but also in the region, when the outlook improved dramatically in the second half of last year amid low interest rates globally.

Responding swiftly. In response to the sharp recovery, the HDB rapidly increased the offer of new flats from the earlier plan of 6,000 to 9,000 in the second half of last year.

For 2010, the HDB recently raised its planned output by more than 30 per cent, from 12,000 to more than 16,000 new flats. It is also prepared to launch up to 22,000 next year. At this rate, in just two years, we will offer more flats than what is currently available in Toa Payoh.



MAINTAINING A BALANCE

Determining the right housing supply for the short term will always be a difficult call, and we have to strike a delicate balance. Economic conditions and sentiments can change much faster than any building plan.

So, while we plan our housing supply to broadly meet longer term needs, we also build in some buffer to deal with short-term fluctuations.

Some might suggest that the HDB could go further and build a much larger buffer or build ahead of demand to deal with market fluctuations.

But this would then create the problems of high holding costs and a potential supply-demand mismatch, which I will deal with in my next article.

Ultimately, whatever the system of flat application, trade-offs have to be made between supplying too little to meet home buyers' needs and supplying too much to the detriment of existing home owners or taxpayers. These are trade-offs that we must balance carefully in the overall interests of all Singaporeans.

The writer is the Minister for National Development.

Source: http://www.todayonline.com

One in Hougang, the other in Woodlands; 2 BTO projects also launched

Published September 22, 2010
By UMA SHANKARI


A NEW supply of HDB flats and land for private homes has been released by the government to continue meeting housing demand.


The Housing & Development Board (HDB) released for sale another two land parcels - one at Woodlands and the other at Hougang - on which a total of 805 private homes can be built.

It also launched two new build-to-order (BTO) HDB projects in Woodlands yesterday.

The two 99-year leasehold sites for private homes are being launched for sale under the confirmed list of the Government's land sales programme for the second half of 2010.

The site at the junction of Woodlands Avenue 1 and Woodgrove Avenue can yield 265 homes. The second site, at Upper Serangoon View, can yield 540 apartments.

Analysts expect a 'reasonable' level of interest in the two land parcels from developers.

CB Richard Ellis executive director Joseph Tan said that if the recent tender for a residential site at Hougang Avenue 7 is used as a guide, the two new sites should draw around four to six bids each. The tender for the 99-year-leasehold residential site at Hougang Avenue 7, which closed on Sept 17, drew six bids.

Land bids are likely to be in the range of $300-$350 per square foot per plot ratio (psf ppr), said DTZ's head of South-east Asia research Chua Chor Hoon.

'The two sites will cater to the mass market segment, mainly HDB upgraders, as they are within HDB estates and are not near MRT stations,' she added.

Interest from homebuyers is also expected to be strong for the two HDB projects, analysts said.

The prices of the HDB flats are very attractive, noted PropNex corporate communications manager Adam Tan.

'Compared to HDB's Q2 2010 median resale prices for similar flats in Woodlands, the median indicated pricing for these units is between 23 per cent (for four-room flats at Woodlands Meadow) and a generous 39 per cent (for three-room flats at Woodlands Meadow) cheaper,' Mr Tan said.

'This will appeal to young couples who have just started their careers and are looking to start a family in the next few years.'

The two new BTO projects - Woodlands Dew and Woodlands Meadow - are diagonally across from each other. Woodlands Dew is bounded by Woodlands Avenue 9 and Woodlands Crescent while Woodlands Meadow is along Woodlands Crescent.

A total of 1,329 units will be offered in the two projects, comprising 330 units of two-room, 220 units of three-room, 569 units of four-room and 210 units of five-room flats. With yesterday's launch, HDB would have offered a total of 14,200 new flats for sale under the BTO and Sale of Balance Flat exercises since the start of 2010.

HDB said it intends to launch more BTO projects for the rest of the year in areas such as Bukit Panjang, Punggol, Sengkang and Yishun. The next launch in October 2010 will offer about 1,320 flats in Bukit Panjang and Sengkang.

The land sales for another two sites under the design, build and sell scheme (DBSS) as well as two executive condominium (EC) sites are also in the pipeline.

The DBSS sites, located in Upper Serangoon and Corporation Drive, are expected to yield about 1,200 units. The EC sites located in Bukit Panjang and Tampines are expected to yield about 1,100 units.

HDB is prepared to launch more sites for development if there is sustained demand, the agency reiterated.


Source: http://www.businesstimes.com.sg