~by: Leong Sze Hian~
I refer to the articles “HDB resale prices up, private property prices moderate” (Asiaone, Oct 3) and “First-time BTO applicants stand good chance” (Channel NewsAsia, Oct 3).
The Urban Redevelopment Authority (URA) flash estimates released on 3 October, show that HDB resale and private residential property prices roses by 3.8 and 1.3 per cent, respectively, in the last quarter.
Demand from foreigners?
The prices of HDB flats are primarily driven by demand and supply.
On the demand side, the population increased from 5.08 to 5.18 million last year.
The number of foreigners and permanent residents (PRs) increased by 80,400 last year, compared to 59,100 the previous year. If most of the increase in foreigners is from higher income or more affluent foreigners, the demand pressures may mainly be on the private property market. However, if the bulk of foreigners are lower-income – they may have to rely on renting rooms or entire HDB flats, or buying resale flats if they qualify to buy as PRs.
When foreigners become PRs or citizens, they too may add to demand pressures in the HDB resale market.
Since the Minimum Occupation Period (MOP) for resale flats was changed from three to five years, the demand pressures on the resale market may increase, as it would take about nine years (four years to build plus five years MOP) for a Build-to-order (BTO) flat to be available in the resale market for sale or rental of the entire flat.
Who can’t buy BTO?
The following are not eligible to apply for BTO flats:-
- Singaporeans who have owned their existing HDB flat for less than five years
- private property and Executive Condo (EC) owners who have sold their property less than 30 months ago
- those who have purchased two HDB or DBSS/EC flats with subsidies or grants
- Singaporeans who cannot form a family nucleus, such as singles, divorcees, etc
- Singaporeans who do not meet the various income ceilings – $10,000 maximum, $5,000 for 3-room, $2,000 for 2-room
- Singaporeans who cannot afford to pay the resale levy of up to $55,000 on their previous flat
- Divorcees who purchased a flat with subsidy or grant will have to wait for five years after their divorce is made absolute
In view of the above, many Singaporeans may not qualify for BTO flats. Moreover, since 95 per cent are reserved for first-timers, even those who qualify for BTO flats but as second-timers, may find it very difficult to get one.
So, where do all the above who can’t apply or can’t get BTO flats go to? – resale flats?
When the National Development Minister stopped disclosing the median Cash-over-valuation (COV) statistics the previous quarter, saying that it was misleading, it may have spooked the market into asking for even higher prices.
After all, isn’t it logical to expect this to be the natural reaction when statistics become so high (COV) that they can’t be disclosed anymore?
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