Published February 2, 2011

PM Lee pledges to keep housing affordable
Government to do more to stabilise the market should it become necessary

By JOYCE HOOI

(SINGAPORE) The government will do more to stabilise the property market should the occasion call for it, Prime Minister Lee Hsien Loong said in his Chinese New Year address this year.

'The government has acted to curb speculation and cool the property market. We will do more to stabilise the market if and when this becomes necessary,' he said yesterday.

'We will keep housing affordable to Singaporeans, especially public housing. At the same time, in a prospering economy, home owners should see their properties appreciating in value over the long term.'

The government had recently announced new rules that would raise the seller's stamp duty on properties to as much as 16 per cent of the sale price if the home is sold within a year, and lower the limit that banks can lend to home buyers for a second property to 60 per cent of the property's value.

On the immigration front, while the prime minister acknowledged the 'sense of dislocation and unfamiliarity' felt by some Singaporeans, he stressed the need to keep up with the world or face stagnation and decline.

'We need immigrants to reinforce our ranks, but we must maintain a clear majority of local-born Singaporeans who set the tone of our society, and uphold our core values and ethos.

'We are managing the inflow of foreigners who want to live and work here. Many want to become permanent residents and new citizens, but we will only select those who can add value to Singapore.'

He pointed out that last year, the nation's total fertility rate fell to an all-time low of 1.16. The Chinese fared worse than the national average, at 1.02, but the decrease in the fertility rate was observed across the board.

'It could have been because of the Year of the Tiger, or perhaps the economic uncertainties the year before, in 2009. Whatever the reasons, I hope more couples will start or add to their families in the Year of the Rabbit,' said the prime minister.

'Chinese New Year is the time for families to come together in celebration, and more babies can only mean more joy in the years to come.'

As part of the effort to ensure the longevity of values and culture, the nation's mother tongues needs to be kept alive, he said.

'We regularly update and improve the teaching of mother tongue languages in our schools, to keep it current and effective.

'Hence, the recent measures announced by the Ministry of Education, which will help a new generation to use their mother tongue languages freely in a changing language environment.'


Source: www.businesstimes.com.sg

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

By UMA SHANKARI

THE Housing and Development Board (HDB) has launched a site at Clementi Avenue 4 for sale under its design, build and sell scheme (DBSS).

An estimated 770 flats can be built on the plot, which has a site area of 235,800 square feet and a maximum allowable gross floor area of 825,300 sq ft. The site carries a lease term of 103 years (including a four-year construction period).

Analysts expect a top bid in the range of $200-$250 per square foot per plot ratio (psf ppr) for the plot. This translates to an overall land cost of $165 million to $206 million.

'This is one of the more attractive sites offered under the DBSS scheme,' said Nicholas Mak, head of research at SLP International. 'It is close to Clementi MRT station. Clementi New Town is also becoming more vibrant, with new projects such as The Clementi Mall.'

While buying sentiment has significantly moderated in both the public and private housing sectors, participation from developers for this site is likely to be motivated by the project's physical strengths and opportunities, said Ong Kah Seng, Cushman & Wakefield senior manager of Asia-Pacific research.

'This site is likely to see moderate interest from developers, who are still interested in providing homes for this specific segment although generally, home-buying sentiments are expected to remain cautious in the months ahead,' Mr Ong said.

The last site offered for sale under the DBSS scheme, at Yuan Ching Road in Jurong, drew a top bid of $192 psf ppr. Six bids were submitted for the site.

The tender for this site will close at noon on March 8, 2011.

Last year, HDB sold five land parcels for DBSS development in Yishun, Bedok, Tampines, Hougang and Jurong West. These five land parcels will yield about 3,000 DBSS flats, and this pipeline supply will come on-stream progressively in 2011.

Another DBSS site at Pasir Ris Central, with an estimated yield of 460 units, will be launched for tender in March. More sites for DBSS development will be made available if there is sustained demand, HDB added.

Flats sold under DBSS are offered to buyers under HDB's eligibility conditions. But the developers who buy such sites have some flexibility in designing, pricing and selling the flats.


Source; www.businesstimes.com.sg

by Tan Kok Keong
05:55 AM Jan 28, 2011

The Government's move to introduce a new set of property market cooling measures two weeks ago was widely anticipated but the harshness of the measures surprised many.

The initial reaction from buyers was mixed. On the weekend immediately after the Jan 14 measures, buyers at Spottiswoode 18 snapped up 170 out of the 251 units launched, surprising many observers. The nonchalant reaction could be because the cooling measures were already a known market risk. These buyers had already overcome their reservations during the pre-launch marketing period and were primed and ready to buy.

This was somewhat similar to the good response to the launch of NV Residences after the earlier round of cooling measures on Aug 30 last year.

In contrast, over the same weekend after the Jan 14 measures, sales cooled in Austville Residences - an executive condominium project - despite earlier reports of potential buyers queueing overnight.

Beyond these anecdotal examples, we collaborated with the research team at leading real estate portal PropertyGuru.com to get a clearer picture of pre-transaction activities.

The number of visitor sessions to the website fell 10.7 per cent in the week after the measures compared with the week before. Comparatively, visitor sessions only fell by 3.5 per cent following the Aug 30, 2010 measures. Visitors searching for resale HDB flats saw the sharpest decline (Chart 1A and 1B). In addition, the number of new listings fell by 6 per cent, while the number of listings rose 2 per cent following the Aug 30 measures.

While there are many other factors that affect the visitor numbers, the comparison gives us a clearer picture of market activity following the measures.

The statistics above reinforce the consensus view that overall marketing activity has fallen. If this persists, transaction volumes will decline. Based on historical analysis, a drop in total sales volume over four quarters tends to lead to a fall in the overall Urban Redevelopment Authority's private residential price index thereafter. This happened at two most recent turning points for prices - in Q2 '00 and Q2 '08. The question remains as to whether the current market cooling measures would lead to a persistent fall in volume and thus prices.

To answer this, an analysis of events after the May 1996 market cooling measures could be a good gauge, as that was the last time when a similarly harsh set of measures was introduced.

Within a year from May 1996, overall private home prices fell 8.9 per cent. While there can be no doubt that market cooling measures played an important role, a closer look suggests that other factors could have contributed to the plunge in prices.

Firstly, the rental market weakened over the same period. Overall occupancy rate fell from 93.8 per cent in Q2 '96 to 91.7 per cent in Q2 '97 due to an increase in the number of units completed. As a result, rents also fell by 9.9 per cent over the same period. In addition, interbank three-month Sibor rose slightly to 5.94 per cent from 5.75 per cent over that period. Buying property for investment became less appealing.

Secondly, the stock market also began to decline over the same period. The benchmark Straits Times Index fell 13.4 per cent within a year from June 1996. To add to the woes, the Asian Financial Crisis started in mid-1997. The loss in wealth in the stock market probably motivated investors to sell assets, which could be another important factor that precipitated the continued fall in property prices.

The above analysis shows that for the current set of market cooling measures to cause another prolonged period of price decline, other conditions need to fall in place. This could come in the form of a decline in the stock market or the business environment, higher unemployment and a deterioration of property market basics. The lack of "wealth destructive" factors was the key reason for the ineffectiveness of the last two rounds of market cooling measures, in my opinion.

Going into the new year, the wealth creation effect appears to be largely on track. According to various equity strategists, the Singapore stock market is expected to perform well this year, on the basis that forward price-to-earnings ratios are still undemanding compared with previous peaks. Business prospects look more promising and employers are planning to expand hiring and increase wages and bonuses.

For the property market, the occupancy rate looks like it could remain above historical average of 92 per cent as completions in 2011 are expected to reach only 6,722 units - below the historical average, according to Urban Redevelopment Authority numbers.

Meanwhile, the prospect for a sharp increase in interest rate appears to be muted. Taken together, this suggests that the slowdown in transaction activity and price growth might again turn out to be temporary. Ironically, if that is the case, we should expect more market cooling measures, which will remain as a market risk in 2011. But by themselves, the measures may not be enough to turn sentiment.

In conclusion, while I expect the market to face immediate downward pressure on volume and prices, the year-on-year price fall in 2011 could be marginal. In the meantime, people interested in properties should keep watch for any of the "wealth destruction" catalysts, which in some instances can fall into place very fast.

Buyers should also note the potential for a weaker rental market from next year due to the large number of housing units to be completed from then onwards. Buyers who are stretching their last dollar to buy their dream home might want to dream less and work their numbers based on more prudent assumptions and exit strategies.



Tan Kok Keong is Head of Research and Consultancy at Orange Tee.


Source: www.todayonline.com

by Joanne Chan
05:55 AM Jan 15, 2011

SINGAPORE - The latest round of cooling measures introduced by the Government, which kicked in today, appears to have created some knee-jerk reaction in the private property market.

MediaCorp understands that some sellers rushed to close deals before midnight to avoid the new rules. Others have pulled their properties from the market.

Property firms told MediaCorp that they have received many enquiries from prospective buyers and sellers after news of the new restrictions broke on Thursday.

First-time private property buyer Christopher Ng, 36, was rushed by his agent into making an offer for a house last night, as the seller wanted to close the deal quickly. However, Mr Ng was pipped to the deal by another buyer.

Mr Ng added: "My other agents actually called me and said that most of the listings have been delisted and so the supply has shrunk."

Dennis Wee Group director Chris Koh said he knew of a buyer who immediately exercised the option to purchase, once the news of the new measures were announced.

The seller's stamp duty has been raised to a maximum of 16 per cent on property sold within the first year, a steep jump from the previous 3 per cent.

Banks will also reduce the maximum loan they extend to those who already have one or more mortgages to 60 per cent of the property value.

While other property analysts felt it was premature to assess the full impact of the measures, Propnex CEO Mohd Ismail said he expects 20 per cent of buyers who had bought properties recently to rethink their transactions.

Buyers who have paid a deposit but do not exercise the option to purchase might forfeit the fees - amounting to 1 per cent of the property's value - which they have paid.

Source; www.todayonline.com

Experts say mass-market condos will lead housing demand this year

by Joanne Chan
05:55 AM Jan 07, 2011

SINGAPORE - With private home prices at record highs, industry players expect developments catering to the mass market to lead demand this year.

Property is seen as a safe and appreciating asset, they say, adding that Singapore's growing economy and low borrowing rates have injected ample liquidity into the market. But even as property is viewed as a good investment, affordability will be key as prices continue to trend higher, they add.

With the Housing and Development Board resale market largely closed off to private property owners, those looking for a second property to invest in are now eyeing mass-market condominiums.

Mr Chris Koh, director of Dennis Wee Group, said: "They already have one private property. The funds that they have are very limited to invest in another high-end private property. They had thought of a HDB flat a year ago, but now they've decided to buy another mass-market, lower-end private property."

Cooling property measures introduced on Aug 30 last year disallow dual ownership of private property and an HDB flat. A private home owner has to sell off his property before he's allowed to buy an HDB flat.

Foreigners settling here will also drive demand for mass-market condos - typically those going for $1,000 psf or less.

Mr Koh added: "We have two groups of foreigners. We have foreigners who are very rich, and there are foreigners who come to Singapore who just want a new place for their children to grow up. They are not as rich as the high-end. So a lot of them enter the mass market. They will buy condominiums near public schools. They will buy condominiums near public transportation."

Foreign investors who traditionally might have snapped up more expensive developments are also thinking twice.

Mr Colin Tan, Chesterton Suntec International's head, research and consultancy, said: "People see risk. So even though they may have enough cash to put a downpayment for something high-end or in the mid-tier, I think sometimes, in order to mitigate the risk, they may still go for the mass market."

Despite a third round of property cooling measures last August, Singapore is still widely seen by investors as a good place to park their money, especially when compared to other countries in the region which have introduced tougher anti-speculation measures.

Hong Kong, for example, imposed a 15-per-cent-stamp duty on all properties sold within six months of purchase.

Market watchers expect private home prices to inch up 1 to 2 per cent each quarter this year, in line with Singapore's expected economic growth.

Source: www.todayonline.com

Published January 4, 2011

Luxury home prices defy market lethargy

Overall price growth for private homes, HDB resale flats slowed in Q4 but high-end hit new high

By UMA SHANKARI

(SINGAPORE) A surge of interest in high-end and luxury homes pushed prices in the segment, which has underperformed the rest of the market over the last two years, to a fresh all-time high in Q4 2010.

But in the rest of the market, prices of private homes as well as HDB resale flats grew more slowly in the fourth quarter compared to the first three quarters of last year.

Flash estimates released by the Urban Redevelopment Authority (URA) yesterday show that overall private housing prices edged up 2.7 per cent in Q4 to a fresh record high.

Private home prices in Singapore first surpassed the former all-time peak achieved in 1996 in Q2 2010, and then continued to inch upwards in Q3 and Q4. For the whole of 2010, prices climbed 17.6 per cent.

But the gain in fourth-quarter prices was the smallest in six quarters, URA's data shows.


The high-end market was a notable exception. Non-landed home prices in the Core Central Region (CCR) micro-market, which includes the prime districts Marina Bay and Sentosa Cove, rose 2.3 per cent in Q4, faster than the 1.6 per cent growth seen in Q3.

This pushed luxury home prices to a new all-time high, outstripping the previous peak in Q1 2008.

By contrast, the price index for Rest of Central Region (RCR) rose by 1.7 per cent in Q4, down from 2.3 per cent in Q3. And in the Outside Central Region or OCR (where suburban condos are located), prices climbed 1.6 per cent in Q4 after increasing 2.2 per cent in Q3.

Analysts attributed the slowdown in price growth in the RCR and OCR areas to resistance from buyers for increasingly expensive projects.

Price growth in the CCR region, by contrast, rose on the back of the prevailing strong economy and low interest rates, which once again enticed foreign investors to pick up luxury homes in Singapore.

'In 2010, much of the activity was focused on the mass and mid-market segments,' said Joseph Tan, CBRE's executive director for residential. 'Foreigners stayed away, thinking that the lack of transaction activity in the high-end segment would lead to a fall in prices and allow them to buy the properties for less.'

But since most high-end home owners proved to have 'holding power', the anticipated fall in luxury home prices did not occur and foreign buyers are slowly returning to the luxury market, Mr Tan said.

The number of foreign home buyers rose by 14 per cent in 2010 compared to 2009, said Knight Frank's head of consultancy & research Png Poh Soon.

'The tightened regulations in Hong Kong and aggressive anti-speculation rules in China caused some investors to shy away from those markets and directed them to Singapore,' Mr Png said. 'High net worth foreign buyers would definitely consider the Singapore property market to park their money.'

Analysts also noted that while the latest round of cooling measures introduced by the government on Aug 30 have not dampened transaction volumes, they appear to have at least moderated price growth. A record 15,500-16,500 new private homes are estimated to have been sold in 2010, despite demand-side and supply-side measures introduced periodically throughout the year.

CBRE's Mr Tan said that transaction volumes were still high in 2010 as many potential buyers are still out looking for units.

But the price growth has slowed as these buyers - especially those house-hunting in the mass-market segment - are sticking to a budget.

Over at the HDB market, prices of resale flats rose 2.4 per cent in Q4 2010 - a slower rate of growth than the 4 per cent increase in Q3 2010 - according to flash estimates from the Housing & Development Board.

But while the resale price index was pushed to yet another all-time record, the transaction volume fell.

The resale volume declined by about 21 per cent in Q4, HDB said. And the median cash-over-valuation (COV) amount is also estimated to have fallen by $7,000 or 23 per cent, from $30,000 in Q3 2010 to $23,000 in Q4 2010.

In fact, COV levels declined progressively over the last three months of 2010, according to data from PropNex.

The firm's chief executive, Mohamed Ismail, said that according to monthly transactions handled by his company in Q4 2010, the median COV fell from $26,000 in October to $23,000 in November and to $20,000 in December.

But overall resale prices are still climbing in spite of falling COV levels due to a time lag, he explained

'Valuations for resale flats that were transacted in Q4 2010 were based on prevailing caveats for flats in the vicinity,' Mr Ismail said.

'There is therefore a certain lag time of about two months and hence the (HDB) prices overall are still climbing.'

Looking ahead, growth in private home prices may slow to anywhere between 3 per cent and 10 per cent in 2011, analysts predicted.

But most are more bullish on luxury home prices, which some said could climb by up to 15 per cent this year.

In the mass-market segment, the ample supply of new homes coming onstream from the beefed-up 2010 Government Land Sales programme should help to keep price growth to less than 5 per cent, analysts said.

And in the HDB resale market, prices are expected to grow by 5-10 per cent in 2011. The overall median COV level should also fall to about $18,000 to $20,000 in Q1 2011, said Mr Ismail.

Source: www.businesstimes.com.sg

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 Mah Bow Tan
05:55 AM Dec 24, 2010

When Kit Chan performed Home at this year's National Day Parade, she struck a chord with many in the crowd, including me. This is my home. This is where people can "build our dreams together". This is what "will stay within me, wherever I may choose to go".

Over the last few months, in this series of articles, I have explained how the Government strives to foster a sense of home and belonging for all Singaporeans through a massive public housing programme. In this final column, let me sum up how the Housing & Development Board delivers this housing commitment in three ways: Homes for the masses, home ownership and homes for life.



HOUSING FOR HOMEBUYERS

Homes for the masses: The HDB builds and prices flats to achieve home ownership for the masses. Unlike some other countries where public housing caters to the poorest minority, the HDB's mission is to house the masses so that we can build an inclusive nation. But we face two growing challenges.

As we become a nation of home owners, demand from flat buyers - many with existing homes - has grown more volatile and sentiment-driven. Oversupply is as worrying as undersupply. Therefore, the HDB moved to the current Build-To-Order system, so that its new flat supply can respond to demand changes, while keeping a small buffer for contingencies.

As Singapore progresses, the people's aspirations are also rising and becoming more diverse. While standard flats will continue to form the bulk of new flat supply, the HDB has to build different flats for different budgets and aspirations, so that public housing remains an inclusive home for Singaporeans.



Home ownership: This is the second hallmark of our housing system. We provide homes for ownership, rather than for rent, so that Singaporeans have a clear stake in the country's prosperity. But even as flats appreciate in value to the benefit of home owners, housing must remain affordable for first-time buyers. The HDB therefore sets aside new BTO flats for first-timers and prices them at a substantial subsidy relative to market value. The HDB also provides housing grants for first-timers to buy resale flats. This helps to ensure affordability and equity in subsidies.

Today, nine in 10 residents own their HDB flats and about 15,000 young couples become home owners every year. Beyond international measures like the Home Price Index (HPI) and the Debt Service Ratio (DSR), our high ownership rate is the clearest indicator that flats remain affordable for first-timers. Most couples buying new flats use only 20 to 25 per cent of their monthly income through CPF contributions to pay for their housing loans, without any cash.

For the minority who cannot readily afford to own flats, public rental flats represent the final safety net. Even then, the HDB and social agencies strive to help these families improve their situations so that home ownership remains a long-term hope for them.




HOUSING FOR HOME OWNERS

Homes for life: The HDB takes a life-cycle approach to its relationship with residents. It helps young couples buy their first homes. It rejuvenates the homes and estates of the existing 900,000 home owners. It also helps older home owners right-size their homes for retirement while they remain staying within their community. Ultimately, HDB flats are not only homes but also an asset whose value can be unlocked, if needed.



Rejuvenating our homes: By 2015, more than 200,000 flats will be at least 30 years old. For older flats to remain attractive and sustain their value for home owners, the HDB embarked on a massive estate renewal programme since the '90s, focusing on Main Upgrading, Interim Upgrading, and Lift Upgrading (LUP).

Since 2007, estate renewal has taken on a larger dimension under the "Remaking Our Heartland" programme. This goes beyond upgrading works by HDB and pulls together efforts by different agencies to give an entire town a makeover. We will breathe new life into the heartlands by injecting new housing, rejuvenating town centres and developing new amenities and recreational areas. These include park connectors, cycling paths, heritage trails, and Active, Beautiful and Clean Water features.

In addition to enhancing the value of HDB flats, rejuvenation must focus on making towns more sustainable. Sustainability is about being able to use our land, energy and water more effectively as well as reducing waste. Punggol will be developed as our first eco-town. Lessons learnt there will be drawn for use in existing towns.



Right-sizing our homes: By 2030, one in five residents are expected to be aged 65 and above. Our HDB estates and policies must prepare for the different needs of elderly home owners. The HDB has begun to upgrade our physical environment to be more elder-friendly. All estates will be barrier-free by next year. The LUP is also on track to provide 100 per cent lift access to all eligible blocks by 2014.

As our population ages and family sizes shrink, Singaporeans may face less family support in their old age. Some may want to right-size and unlock their housing asset. HDB has put in place various options. Under the Lease Buyback Scheme, elderly home owners can receive a long-term income stream without uprooting from their surroundings. Elderly flat owners can also rent out spare rooms or whole flats for income, as their children grow up and move out. The elderly can also choose to right-size and buy studio apartments that are better equipped for their needs.



Building cohesive communities: Besides looking after individual home buyers and owners, the HDB's larger mission is to build cohesive communities. The HDB experience is an important part of the Singapore story where people of different backgrounds, ethnicities and incomes live harmoniously together as a community.

This is why the HDB spends considerable effort on planning our estates, down to the layout of blocks, precincts and neighbourhoods. HDB void decks, playgrounds and precinct pavilions are just some of the spaces carefully designed for residents to mix and mingle as part of their daily routine.




HOMES WHERE WE BELONG

When the HDB was formed in 1960, its pressing challenge then was to solve the huge housing shortage for Singaporeans. Fifty years on, the HDB has succeeded beyond expectations and received numerous international accolades for its achievements. I am thankful for the selfless contributions of the many men and women in the HDB through the years who have made it possible.

What about the next 50 years and beyond? Clearly, the focus of the HDB's challenge will evolve. Besides providing attractive and affordable flats for new homebuyers, the HDB's greater challenge will be to sustain the quality of life, community bonds and value that HDB flats bring to home owners, even as our estates mature.

While the challenges in the next phase will be different, the HDB's core mission of building homes and bringing hope of a better life for hardworking Singaporean families remains unchanged. With the continued support of other agencies, community leaders, and residents, I am confident that we can build an even better home for all - one where "we'll build our dreams together. Just like we've done before".

To all those who have followed this series of articles and given me comments, feedback and suggestions, let me say a sincere "thank you". I am also grateful to Today for providing me this platform to engage Singaporeans on this very important subject. Finally, I wish everyone season's greetings and a very happy and successful 2011.



The writer is the Minister for National Development. This is the last of nine commentaries that he has written exclusively for Today.

Source: www.todayonline.com

by Joanne Chan
05:55 AM Dec 21, 2010

SINGAPORE - The rising property prices have shown few signs of slowing since Singapore's recovery from the global economic downturn.

This year, a strong economy, low unemployment rate and ample liquidity pushed private property prices past the previous peak in 1996.

In the public housing sector, prices in the resale market hit new highs.

The cash premium buyers pay upfront - also known as cash-over-valuation (COV) - climbed to $30,000.

Faced with the possibility of a property bubble, the Government introduced cooling measures in September last year and February this year. The slew of measures ranged from raising housing supply to clamping down on speculation by tightening existing rules.

However, demand continued unabated.

Mr Nicholas Mak, the executive director of Research and Consultancy at SLP International, said: "The market seemed to take it into its stride and continued to expand; sales were still climbing and so were prices."

So, another round of measures were implemented in August, including raising the effective period of the seller's stamp duty to three years.

The maximum bank loan amount was also reduced to 70 per cent.

Analysts noted that this approach of taking "small steps" to regulate the property market is unlike the previous property run, when a capital gains tax was introduced prior to the market crash in 1996.

In a recent interview with MediaCorp, National Development Minister Mah Bow Tan reiterated this cautious approach of incremental steps is to bring prices down to a sustainable level but not crash the market.

Said Mr Mah: "We are not taking a big bang approach but taking a very calibrated approach to this."

Noting that the measures introduced in August appear to have had more impact on the public housing market, Mr Mah added: "The big change was when we disallowed dual ownership of public and private property within this minimum occupation period, which is now five years. Previously it was three years."



'Sellers should be more realistic'

COV for resale flats has declined gradually, dropping to $22,000 last month.

Observers say COV levels may eventually drop to $10,000 to $20,000, as more housing becoming available.

The Government plans to release 22,000 new public flats next year, depending on the take-up rate. The HDB will also release land sites for another 4,000 flats under the Design, Build and Sell Scheme and 4,000 executive condominium units.

Dennis Wee Group Director Chris Koh said sellers need to be more realistic about their expectations in the current market.

Said Mr Koh: "This isn't like a year ago, when you could ask for COV as high as possible and people may just grab it. But I think buyers are now a lot more wiser. And those who were really in need and desperate would have bought."

The impact of the measures on the private property market remains to be seen.

September saw a frosty reception from buyers, with the number of private homes sold plummeting below the 1,000 unit level.

However, the market rebounded quickly. Last month, some 1,900 units were sold.

The Government has indicated it will introduce more measures if necessary to temper demand.

But for now, it appears no further action will be taken as it monitors the impact of its latest measures.

SLP International's Mak said the next round of measures, if any, would likely come in the middle of next year.

"One possibility is that they could further tighten the loan-to-value for investors, thus making it more expensive or more risky for investors who already own one or two properties and are buying their third or fourth one," said Mr Mak.

A broad measure, such as a capital gains tax which will affect all homebuyers, should only be a last resort, Mr Mak added.

Source: www.todayonline.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

National Development Minister says the market has not yet felt full impact of cooling measures
by Joanne Chan

Updated 12:32 PM Dec 07, 2010

SINGAPORE - While cash-over-valuation (COV) and the number of transactions in the Housing Board resale market are heading south, National Development Minister Mah Bow Tan believes it will be another one to two months before the full impact of the Government's cooling measures is felt.

In an exclusive interview with MediaCorp, Mr Mah revealed that the median COV last month was $22,000, down $3,000 from that for October. This marks the second month in a row the COV has fallen, a sign property cooling measures set in August are taking effect,

And the number of HDB resale transactions has fallen some 30 per cent in the fourth quarter thus far compared to last quarter.

The COV hit a high of $30,000 for two straight quarters this year, sparking concerns that first-time home-buyers might be priced out of the resale market.

Said Mr Mah: "Now, you are seeing that resale prices and the COV are not only stabilising but are starting to come down. So, I think there's really no need to rush (to buy a flat)."

Transaction numbers from property firm Dennis Wee Group (DWG) also reflect the downward trend of COV and sale volume.

DWG director Chris Koh said he expects the COV to drop to $20,000 this month.

He said: "Things usually slow down (in December) because of Christmas, New Year, school holidays ... So, with the measures in place, (and) with new flats coming up, we should see demand ease off a little."

Mr Mah said the Government was comfortable with the current situation and there was no need for further cooling measures for now. More steps would be taken only if necessary, he added.

While prices appeared to have stabilised, Mr Mah acknowledged housing "would probably be more (of) an issue" at the next General Election.

He said: "It's always been an issue at every election as far as I can remember ... The main thing is that in an election, we have to offer - to the residents (and) voters - our platforms, our polices. Whoever can convince the voters they can do a better job in improving their lives will get and deserves to get the vote."

Source: www.todayonline.com

Published December 6, 2010

A few speculators forced housing curbs: Hwee Hua

THE government had to introduce cooling measures to curb speculation in the public housing market due to a small group of private property owners, says Lim Hwee Hua, Minister in the Prime Minister's Office.

She was responding to questions at a dialogue session yesterday morning, which was part of a community visit to Kampong Chai Chee.

'(The Housing and Development Board's) feedback to us is that, for resale flats, the Cash-Over-Valuation (COV) is rising all the time. So HDB and the Ministry of National Development looked at what's causing this to rise and who are the participants in the market,' Mrs Lim was quoted by the media as saying.

'They realised that there is a group of private property owners, a small percentage who speculate (on) the properties . . . and this has caused prices in certain areas to rise faster.'

Cooling measures were announced some months back, such as extending the holding period for the seller's stamp duty to three years.

The minister added: 'It's not a restriction on private property owners but a whole series (of measures) to cool the market down. And the starting point is meeting the needs of Singaporeans who would like to own a flat.'

HDB has said that it plans to launch up to 22,000 flats in 2011 if strong demand persists.

Other issues that came up during the dialogue included the Lehman Brothers minibond debacle, which underlined the need for stricter financial regulation.

'The Monetary Authority of Singapore (MAS) has imposed stricter regulations. So the tightening of regulations is one important aspect. The other area is that of compensation - how much compensation there should be,' she was quoted as saying.

MAS also worked together with all the banks to set up a process whereby investors can approach the banks where they bought the bonds to submit a request for compensation.

'The banks would have to decide whether the investor, at the point of making the investment, was misled. And some of them have gotten the full compensation. A lot depends on how knowledgeable the person is at the point of investing. That is how MAS approached the whole problem with all the banks,' Mrs Lim said

Source: www.businesstimes.com.sg

Housing for the lower income


It's all about giving hope for a better future

by Mah Bow Tan
08:21 PM Nov 26, 2010

Over the last two months, I have shared my thoughts about public housing in Singapore - why we actively promote homeownership, why the Housing and Development Board (HDB) has to build different flats for different buyers, and how flats are made affordable. But the path to homeownership is not always easy for some families, especially if they fall on hard times.

Take the case of Mdm P. She was only 35 when she divorced her husband and was awarded custody of her two young children. She was not working and had no income. Her future seemed bleak.

After assessing Mdm P's case, the HDB helped her with a subsidised rental flat. Seven years on, Mdm P has a good steady job and has moved her family to a 3-room HDB flat in Sengkang. She pays for her housing loan almost entirely out of her CPF contribution. Mdm P is hopeful of the future for her and her family.

This is the heart of the HDB story - hope for a better future for all Singapore families. However, I am sometimes asked: Is homeownership really possible for the lower-income, when they can barely make ends meet? Aren't they better off just staying in a public rental flat, perhaps for the rest of their lives?




SUPPORTING HOME OWNERSHIP

Since its earliest days, the HDB's main objective has been to give families a home and a stake in the country. Homeownership for the lower-income may not be easy, but it is possible with hard work and some additional help from the Government.

The Additional CPF Housing Grant (AHG) was introduced in 2006, and increased in 2007 and 2009, to help flat buyers with lower incomes to own their first homes (see graphic). As the name suggests, the AHG comes in addition to the existing market subsidy for new flats and the CPF Housing Grant for resale flats. The HDB also builds more affordable 2-room and 3-room flats for lower-income families.

Take the case of a first-timer family earning $1,400 a month and buying a 2-room BTO flat. Besides enjoying the market subsidy on their flat, they can also enjoy a $40,000 AHG and obtain a loan from the HDB, if eligible. Their monthly mortgage payment comes to $230, which is 16 per cent of their household income. Even better, their mortgage payment can be paid fully from their CPF.




SAFEGUARDING THE HOUSING SAFETY NET

Despite the extensive subsidies, there may still be some who find it difficult to own a home. They may be unable to work due to old age or physical disabilities. Or they may face temporary setbacks, like Mdm P. The HDB's heavily-subsidised public rental flats are the final safety net for these needy families even as social agencies help them to improve their longer-term incomes. The monthly rent for a 1-room flat is as low as $30.

To speed up the allocation of public rental flats to this group, the HDB has been increasing the supply of rental flats since 2007. Eligibility rules for rental flats have been tightened to safeguard them for the truly needy. For example, those who have substantial savings or enjoyed significant proceeds from the sale of their previous HDB flats do not qualify for rental flats.

In line with our philosophy that family should be the first line of support, the elderly are encouraged to stay with their children as far as possible.

Through these measures, the HDB has reduced the waiting time for rental flats from 21 months in 2008 to about nine months today.




GUARDING AGAINST ABUSE

Should the HDB provide subsidised rental flats to all who come forward for help? About eight out of 10 appeals for rental flats are from those who have previously owned subsidised HDB flats. Many of them have cashed out on their flats and spent their proceeds, sometimes without any clear plan for their next home.

A few elderly applicants also have children who could help to house them. Recently, a Mdm T appealed for a 1-room flat, claiming that she had a hard time living with her married son. She had cash savings and owned a car. She also received a regular allowance from her children. She told the HDB that her children would hire a maid to look after her in the rental flat.

In such cases, is it wise for the State to take over the responsibility of looking after them, because they could not get along with their family?

If the HDB were to do so, would this not encourage such behaviour? Would this be fair to other homeowners who have made responsible choices? Or taxpayers who have to fund the subsidised rental flats?





TACKLING UPSTREAM ISSUES

The problems faced by lower-income families with housing needs are often multi-faceted, extending beyond housing alone. The HDB tries to tackle the problems upstream with other agencies, while maintaining rental housing as the final safety net.

For families in mortgage arrears, the HDB's housing counsellors advise them on their accommodation options, including how to right-size to more affordable flats. To prevent families from selling their flats without considering their next home, the HDB recently introduced a seven-day cooling period for homeowners to think through their decisions carefully. Meanwhile, the new Council for Estate Agencies will act against agents who mislead homeowners into selling their flats.



BUILDING HOMES AND HOPES

Public housing in Singapore goes beyond providing a roof over the heads of lower-income families. Being able to own a home - a valuable asset - helps families to build hope and improve their lives and those of their children. .

The Government is committed and prepared to help lower-income Singaporeans in this journey to homeownership. But citizens must take responsibility for themselves too. Otherwise, our safety net of public rental housing would collapse under pressure.

We recognise that some families may need to rebuild their lives slowly and the path to homeownership may take longer. Mdm P and others like her have shown us that this journey is still very possible, despite the challenges. We must continue to support hardworking families to build the hope of a better future. This HDB story is ultimately part of our Singapore story.

The writer is the Minister for National Development.

Source: www.todayonline.com

Published December 4, 2010

More HDB resale matters available online

By LYNN KAN

THE Housing and Development Board (HDB) is making resale transactions easier by moving more processes online.

This would be lead to lower online application fees for customers when compared with hard copy applications, and is also more environmentally friendly, said the HDB in a press release yesterday.

One of the changes made is that HDB is allowing all buyers, sellers and licensed housing agencies to book their first appointment dates for resale on HDB's e-Resale page from Jan 3, 2011.

Currently, buyers and sellers may only indicate their preferred date on e-Resale.

Previously, only agencies accredited by the Singapore Accredited Estates Agencies (SAEA) could set first appointment dates on the Internet by subscribing to ResaleNet.

HDB said that as of yesterday, ResaleNet was changed to allow all licensed housing agencies to be subscribers and set appointment dates.

The third major change is that from Jan 3, 2011, buyer and sellers, or their agents, may submit portions of the resale application separately rather than jointly.

Once HDB receives the first party's portion of the application, it would notify the other party through their MyHDBPage on the HDB website. The other party should submit their forms within seven days to book the first appointment. After that, the submission would then lapse and a fresh application would have to be made.

HDB has modified the rules after receiving feedback that buyers and sellers 'are not comfortable divulging their personal particulars to the other party, or their housing agents'.

HDB said that it would no longer be accepting hard copy resale applications and valuation requests from Jan 3, 2011.

HDB customers without Internet access may submit applications online at the e-Lobby at HDB Hub or at any HDB branch office.

Members of the public who require more information may e-mail hdbresale@hdb.gov.sg or call its enquiry line at 1800-866-3066 from 8am to 5pm, Mondays to Fridays.

Source: www.businesstimes.com.sg

by Ku Swee Yong
05:55 AM Nov 19, 2010

Singapore is about 700 sq km in size and has roughly 890,000 public housing, 70,000 landed residential and 187,000 non-landed residential units. It is a small country with a small residential property market compared to 100 or more countries. However, the challenge of keeping tab on the physical supply of residential units in Singapore seems insurmountable, especially when trying to estimate future supply.

It seems easier to track completions for the private residential sector as the Urban Redevelopment Authority (URA) publishes quarterly data. Data for Housing and Development Board (HDB) completions and total HDB supply are available once a year from its annual reports. As we have no ability to forecast the HDB demolition pipeline, net additional supply of HDB stock is also impossible to predict.

Let's examine the anticipated supply of private residential units this year. In the URA's 1Q2006 publication, it was anticipated that 6,115 units will be completed this year. Most of those were "planned" and not yet "under construction".

Over the next few quarters, this number grew and by 3Q2007, it was anticipated that up to 21,451 units will get the Temporary Occupation Permit (TOP) this year. This is a 251 per cent rise over 18 months. During that time, there were worries that private residential prices were rising beyond the reach of HDB upgraders. The strong supply numbers sought to alleviate these concerns.

However, as the global economy faltered with Bear Stearns disappearing in March 2008 and Lehman Brothers collapsing in September 2008, the anticipated number of units getting TOP for this year dropped to a low of 5,394 in 2Q2009, coinciding with the worst point of most major stock market indices. This was only nine months away from 2010.

What happened? Did construction companies stop work? Did developers request construction companies to slow down? How did the anticipated supply ratchet down as quickly as it had sprung up?

Forecasts should get sharper and more precise as the event draws nearer. Yet those were turbulent times and the URA's survey of developers could have reflected high degrees of uncertainty too.

But the swing from a high of 21,000 to 5,400 and now back to around 10,000 makes challenging work for investment consultants.

Average annual completions in the last decade numbered about 8,000 units. In mid-2007, an investor holding a residential unit that should be completed this year would think that there was way too much supply coming onstream. He would decide to sell.

In the middle of last year, an investor holding a unit that should be completed this year would decide to hold, because there seemed to be inadequate supply coming onstream. However, the 5,394 units that were anticipated to be completed in the whole of this year were surpassed by June this year, when 5,786 units obtained TOP.

We anticipate this year will close off with 10,536 units completed, almost double the number that the investor in the middle of last year had thought and 32 per cent higher than the long term average of 8,000 units. It poses a challenge for us in advising clients who may want to time their investments and divestments.

What's the supply outlook for the next few years?

As we approach next year, I anticipate that we would also face an upsurge in TOP numbers. Although current official data show that 6,766 units will get TOP next year, my estimate is that we are likely to close next year with more than 10,000 units completed per year. There is a very high chance that many of the units anticipated to complete in 2012 will be ahead of schedule.

Two financial analysts I hold in high regard are Ms Wendy Koh and Mr Tan Chun Keong from Citibank Equities Research, who faithfully track and make projections for private residential completions. In their report Singapore Property - Increasingly Unfavorable Risk/Reward Ratio, they forecast a completion of over 10,000 units in this year and 11,000 each next year and 2012.

Responding to the thirst for private housing and for land to build private residential developments, the Government Land Sales (GLS) programme for 2H2010 has 18 sites on the Confirmed List and 13 sites on the Reserve List. These 31 sites can generate 13,905 units. This is the highest potential supply quantum in the history of the GLS programme.

The HDB has also stepped up its supply of new homes. In his National Day Rally speech, Prime Minister Lee Hsien Loong said 16,000 new HDB flats would be built this year and up to 22,000 next year. In addition, the HDB will accelerate the completion of flats to 2.5 years.

As for the total supply pipeline of private homes, there are almost 73,000 coming onstream within the next five to six years. As many as 55,000 units are expected to be completed by 2014. This represents more than 20 per cent of today's total stock of about 257,000 units.

Of the 19,535 units that are expected to get TOP in 2013, 11,621 are already under construction. Of the 20,504 in 2014, 8,768 are already under construction. We estimate the bulk of those "under construction" units will be completed ahead of schedule because building a typical condominium project takes 24 to 30 months. Exceptions would be very large-scale developments such as The Interlace that has over 1,000 units. Most projects that have begun construction should be completed in late 2012 or in 2013.

What does this all mean?

To sum it up, we believe that in the private residential space, there will be about 11,000 to 12,000 units completing next year and in 2012, and about 12,000 to 14,000 units completing in 2013 and 2014. The completions this year and next will be heavier in the prime districts but completions in 2013 to 2014 will be mainly in the mass market segment.

Adding to this are 16,000 to 22,000 HDB flats that will be completed per year. So, prices may slide from the potential oversupply rather than from the policy measures announced on Aug 30.

What about the demand side of the equation? Singapore's economic make-up has been overhauled and restructured in the 13 years since the Asian financial crisis. Job creation has been strong, with the services sector expanding and financial institutions abuzz with activity, and demand for housing will be driven by the population growth.

So while we may see a potential price drop of 10 per cent next year, the global economic recovery anticipated in 2012 may bring new levels of demand to Singapore.

Supply within three years we can confidently forecast. As for demand, we can be optimistic, but to be able to forecast whether it will match or exceed supply, I'll sign up for tea-leaves-reading classes.



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

Source: www.todayonline.com

by Colin Tan
05:55 AM Nov 19, 2010

If there is anything remarkable about the recently-released developer sales for last month, it has to be the spectacular return of HDB upgraders to the housing market.

In all, 1,597 units were sold during the month, of which about a third or 529 were executive condominiums (ECs). They helped propel developer sales to a dazzling 74 per cent gain over the previous month.

The release of new ECs for the first time in about five years helped relieve some of the growing pent-up demand from upgraders, as well as absorb some of the liquidity pressures in the lower tiers of the housing market.

For many months now, upgraders have been sidelined by investor buyers in the private housing market. While liquidity levels are also at much higher levels at the lower end of the housing market, they cannot match the funds in the hands of investors.

Much of the upgrader demand has no place to turn to as prices of even the mass market segment rise beyond the affordability of most of these buyers. The limited options available to this sandwiched class are to upgrade to ECs and, to a lesser extent, Design, Build and Sell Scheme (DBSS) units.

I expect sales from the upgrader segment to continue to grow from strength to strength in the coming months as more EC and DBSS projects are launched.

Some have suggested that ECs are siphoning off some of the demand for the lower-priced mass market private housing apartments. They note that mass market condos in suburban areas had suffered a drop of about 25 per cent in sales volume, compared with the figure in September.

I would think not. The markets are quite distinct by now, polarised by the jump in prices over the past several months. Upgrader buyers in the private housing market are now in the small minority.

If there was a sharp drop in sales of mass market condos, it was because fewer such projects were launched.

It was also reported that the number of private homes sold in the $2,000 to $2,500 per sq ft price band last month was 207 units, or about eight times the 26 units developers sold in September.

If there were more units sold in the higher price bands, it was because more of such projects were launched during the month. This statistic in itself does not mean prices have risen much higher.

If we analyse price trends without regard to the launches, it will be very confusing. Prices will be shooting up one month and down sharply in another.

Some have commented that the buoyant sales last month may soon lead to another round of cooling measures. Without a proper analysis of prices, I think it is a little premature to talk about a new set of measures.

Have the cooling measures worked?

Industry observers have not helped with their comments. This is partly because they themselves are not clear about the objectives of the cooling measures. If anything, the calibrated approach in the introduction of the cooling measures is meant to restrain prices rather than curtail sales.

And the measures are not targeted at any one housing segment. While they may appear to affect the mass market segment more than others, I am pretty sure that was not the primary objective of policymakers.

The measures are meant to safeguard the system, not punish developers or investors. If sales soared while prices stayed flat, I do not think they will put the system at further risk. The problem is rapid price increases without corresponding growth in fundamentals.

Has that happened again? Maybe yes, maybe no. The test will be when the flash estimate of the property price index is released at the end of this year.

Finally, there has been much debate about housing affordability as well as statistics put out to show if housing is still affordable or otherwise.

At the end of the day, it boils down to the individual household. Even as household incomes rise, they may have less to spend for housing after setting aside money for necessaries.

Many people tell me that children's tuition, music and ballet lessons and holidays are necessary expenditure these days. So are mobile phones, flat screen TVs, broadband and housemaids. With a growing list of necessaries, housing affordability will always be an issue with some households.

Perceptions of affordability also depend on the threshold of the household. Are they conservative spenders or risk takers? A conservative household will always need to set aside more before spending on a home.



The writer is head, research and consultancy at Chesterton Suntec International.

Source; www.todayonline.com

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

by Mah Bow Tan
05:55 AM Oct 29, 2010

The prices of HDB flats are always a subject of much public interest. In my conversations with young couples, a common question I hear is: "Why are HDB flats so expensive? Prices today seem much higher than what our parents paid in the 1970s and 1980s!"

I can understand these concerns, especially from those looking to buy their first homes. Yes, flat prices have increased over the years. But, in this article, I will explain why this has happened and, more importantly, why rising flat prices, if supported by economic fundamentals, is in the overall interest of everyone - homeowners and homebuyers.



PROVIDING A HOME AND ASSET

Home ownership versus rental: Governing is about making choices and tradeoffs. Which policy will bring greater benefit to the people? What are the implications and costs to taxpayers? In public housing, governments have to make a fundamental choice between home ownership and rental. Most countries have chosen the rental model. Tenants pay subsidised rents, but own nothing.

Singapore decided early on to promote home ownership. We subsidise public housing so that each family can own, rather than rent, its home. The flat becomes a store of value that can appreciate over time as the country develops. We are the only country in the world that has made affordable home ownership a major pillar of its public housing policy.



Resale at market versus cost - Unlocking value: Having chosen home ownership, we must then allow the true value of the flats to be recognised and realised.

Again, we have a choice: Do we require the flat to be sold back to HDB at a fixed price, or do we allow it to be sold on the open market? We have chosen the latter. We let the market determine prices but keep a close watch to temper excessive exuberance, where necessary.

Today, every HDB flat has an open market value which its owner can realise, after staying in it for a minimum period. The values of HDB flats today reflect Singapore's growth and prosperity since the 1970s and 1980s.

While owners may be happy that the value of their flats has gone up, what about first-time buyers? How do we fulfil our commitment to provide an affordable home for them? We do so in two ways: One, by giving them housing grants to buy resale flats; and two, by building new flats which are sold at subsidised prices - within the reach of various income groups.

Hundreds of millions are spent each year to subsidise first-time buyers. That is why the home ownership rate among young Singaporeans is so high, unlike many other cities in the world.



ENSURING FAIR PRICING OF NEW FLATS

For resale flats, we have allowed the market to determine their prices based on value. How do we set the prices for new flats? Broadly, there are two options: Price according to market value or price according to cost.



Fairness for all buyers: In the early years, HDB adopted a zonal pricing system, where the price of each new flat was fixed according to geographical zones. Pricing largely took into account the cost incurred in building the flats and the same price was charged for a given flat type within the zone, regardless of its actual location and attributes. A flat on the 10th floor was priced exactly the same as one on the second floor. Back then, there was practically no open resale market.

However, as we allowed the resale market to develop in the 1980s, buyers showed that they clearly valued different flats differently, depending on factors like location, view, and design.

They were willing to pay much more for a top-floor flat commanding the best view, compared to a lower-floor one facing the bin centre. HDB could no longer price a top-floor unit the same as one lower down.

To do so would be most unfair to the lower floor buyers. Therefore, HDB started moving towards market-based pricing.

New flats are now priced based on what professional valuers assess similar flats would fetch in the open market, but discounted with a substantial subsidy. This is fairer for two reasons. First, all buyers would get the same public subsidy that they can encash, if the flat were sold in the resale market. Second, buyers would pay for what they get, in terms of location, direction, view, etc.



Fairness across generations: Some have argued that land specifically should not be valued at market levels, since some plots had been compulsorily acquired in the past at low cost.

If we follow this logic, we should price a flat built on reclaimed land in, say, Punggol much higher than a flat in Tanjong Pagar built on land acquired by the state. Surely, this is not fair for the Punggol flat buyer, when the Tanjong Pagar flat clearly has a higher resale value? More importantly, we need to recognise the true market value of land, so that the precious limited land we have is used prudently and optimally. If land is undervalued, we will use up more land now at the expense of future generations.



Affordability to buyers: If market-based pricing is fairer, why do some people argue for cost-based pricing? Perhaps they believe that cost-based pricing means cheaper flats. But this is not true. To ensure affordability, HDB gives extensive subsidies below market value. As a result, market-based prices can be below cost. For example, for Punggol Spectra and Fernvale Crest - two recent Build-To-Order (BTO) projects - the average development cost per flat was $220,000 to $240,000, while the average selling price was $160,000 to $200,000, or $40,000 to $60,000 below cost.

HDB flats are generally priced below their development costs. Over the last three years, the average annual loss on the sale and development of HDB flats was around $600 million. If we include other housing subsidies, such as the Additional Housing Grant and the CPF Housing Grant, HDB's total annual deficit would be about $1 billion.

Housing affordability can be achieved under any pricing system. It all depends on the level of subsidy given. I know some first-timers worry that market-based pricing leaves them entirely at the mercy of market forces. Let me assure them that HDB reviews its subsidies regularly to ensure affordability for first time homebuyers. I will discuss this issue in greater detail in my next article.



RECOGNISING VALUE IN PRICING

Today, we have built a unique public housing system that is based on home ownership. It offers Singaporeans not only shelter but also a store of value. Singaporeans generally understand and are prepared to pay for value. This is why some of the higher-priced, premium HDB flats attract more buyers than the more affordable, standard flats. For example, there were 13 applicants per flat for the Punggol Waterway Terraces, compared to four to seven applicants per flat for standard BTO projects launched there this year.

We must price new HDB flats such that the public subsidies that can be realised on resale are fairly distributed across buyers. As the custodian of public wealth, the Government must also use its resources wisely, including land, regardless of how they were acquired, so that the needs of current and future generations of homebuyers can be met.

Recognising the value of the flat in its pricing is a key part of this.



The writer is the Minister for National Development.

Source: http://www.todayonline.com

Private home prices up just 2.9 per cent in Q3 from Q2's 5.3 per cent; number of new home sales and HDB resale transactions also fall

By UMA SHANKARI

(Singapore)

PRIVATE home prices in Singapore rose just 2.9 per cent in the third quarter - slightly lower than the previous estimate of 3.1 per cent in early October - as the impact of new cooling measures were felt. Private home prices climbed 5.3 per cent in Q2.


The number of new homes sold by developers also fell in Q3, together with the number of resale and sub-sale transactions, data released by the the Urban Redevelopment Authority (URA) yesterday showed.

The slowdown was also noticeable in the public housing market. The number of the Housing & Development Board (HDB) resale transactions fell by about 10 per cent quarter-on-quarter, from 9,114 cases in Q2 this year to 8,205 cases in Q3. This was largely due to the 25 per cent drop in monthly resale volume from August to September - after the cooling measures were introduced on Aug 30.

HDB resale prices, however, continued to grow at a steady clip. HDB's resale price index rose by 4 per cent in Q3 - slightly lower than the 4.1 per cent recorded in the second quarter but still higher than the 2.8 per cent growth seen in Q1 this year.

HDB resale prices kept climbing as cash-over-valuation (COV) levels continued to inch upwards.

PropNex chief executive Mohamed Ismail pointed out that while the overall median COV remained at $30,000 in Q3, a closer examination of the figures revealed that median COVs for individual flat types rose by about $2,000 to $3,000 across three-room, four-room, five-room and executive flats in Q3 as compared to Q2.

However, Mr Ismail cautioned that market watchers should not conclude that the government's cooling measures had not worked as HDB's Q3 data is largely based on July and August figures.

Echoed Eugene Lim, associate director of ERA Asia-Pacific: 'HDB's resale price index show that resale prices continued increase by 4 per cent in Q3 because most of the transactions were submitted before the Aug 30 announcement of property measures. As such, the impact of these measures on resale prices would probably be reflected in the Q4 numbers.'

But in the private housing market, the slowdown was already apparent in the Q3 data.

The 2.9 per cent gain in private home prices in Q3 is much slower than the gains of 5.3 per cent in Q2 and 5.6 per cent in Q1 this year.

URA's data showed that prices rose more slowly across all regions of Singapore. Non-landed home prices in Core Central Region (which includes the prime districts, Marina Bay and Sentosa Cove) climbed 1.6 per cent in Q3, lower than the 5.4 per cent per cent growth in Q2.

Likewise, the price index for Rest of Central Region rose by 2.3 per cent in Q3, down from 4.6 per cent in Q2. And in the Outside Central Region (where suburban condos are located), prices climbed 2.2 per cent in Q3 after increasing 5.7 per cent in Q2.

In addition to the slowing price growth, the number of property transactions also dipped.

Developers sold 3,638 new homes in Q3 this year, down from 4,033 in Q2 and 4,380 in Q1.

The momentum of sales in the secondary market also slowed down in tandem with the primary market.

A total of 4,172 resale transactions were registered in Q3, 20 per cent lower than the 5,233 transactions in the previous quarter. Sub-sales numbered 703, also 20 per cent lower than the 880 deals done in the second quarter.

CBRE Research executive director Li Hiaw Ho noted that the 703 sub-sales represent 8.3 per cent of the total sales volume in the third quarter of this year.

'This is the third consecutive quarter where sub-sales made up less than 10 per cent of total sales, showing that the government measures have effectively capped speculative activity to a more acceptable level,' Mr Li said.

Rents of private residential properties rose 3.6 per cent in the third quarter, lower than the 5.9 per cent increase in the April-June period.

But Ong Teck Hui, Credo Real Estate's executive director of research and consultancy, noted that one sector of the private residential market - landed homes - was still buoyant.

While the rate of price increase for non-landed homes slowed from 5 per cent in Q2 this year to 1.6 per cent in Q3, landed home price growth rose from 6.2 per cent in Q2 to 7.7 per cent in Q3.

'The trend of landed prices increasing more rapidly is due to strong demand for landed homes while supply remains limited,' Mr Ong said. 'Buyers of landed homes also have higher affordability and are therefore better able to cope with price increases.'

Looking ahead, analysts expect sentiment in the private residential property market to remain subdued over the last three months of the year as the latest round of cooling measures continue their work.

Developers' sales of new units are expected to fall further to just 1,500-3,000 units in Q4 while the island-wide residential price index is forecast to increase by at most 2 per cent in the final quarter of the year.

And in the HDB market, the number of resale transactions is expected to dip by another 20 per cent in Q4 from Q3, analysts said. They also expect HDB resale price growth of just 0-2 per cent over the fourth quarter. In fact, resale prices may even adjust downwards by 5-8 per cent over the next six months, said ERA's Mr Lim.

Published October 23, 2010

http://www.businesstimes.com.sg