by Vina IP
Below is a letter I wrote to the editor of The Straits Times three weeks ago. Unfortunately, it was not picked up and has never been published in the Straits Times Forum.
I refer to the article “Fear of missing out? Beware agents’ hype on new home sales and prices” (The Business Times, June 25).
Recently, the tactic to continue re-issuing options to purchase to buyers upon expiry has been widely adopted by developers and their marketing agents in newly-launched condominium projects. This is meant to jerk up monthly sales numbers. No wonder new private home sales jumped 75 per cent in May despite the closing of sales galleries during circuit breaker.
In February 2019, after a Credit Suisse report pointed out the discrepancies between the reported and actual number of new units sold, the Urban Redevelopment Authority (URA) promised the public to adjust the monthly sales figures submitted by the developers based on the number of returned units.
However, according to the monthly data published by URA, there continues to be a high number of returned units happening every month for these “best-selling” new projects.
Under the COVID-19 crisis, the Ministry of Trade and Industry forecast Singapore’s economy to shrink by 4 to 7 per cent. The country is heading for a deep recession with significant job losses, especially for mid-career workers. The middle-age PMETs with school-going children will be most hard-hit by the economic downturn. This is the time to be prudent and exercise caution for home upgrade or new property purchase.
It is irresponsible of developers and agencies to mislead the general public into believing that the property market is still thriving while the truth tells the opposite. We hope that the Ministry of Finance can monitor the private residential property market closely and caution home buyers to be prudent in their property purchase at this critical time.
Some agents are misleading their clients into believing that developers are raising prices. They make use of the “Fear Of Missing Out (FOMO)” mentality of the buyers to rush them into making a rash decision. With higher commission of 3 to 5 per cent from developers’ new launches, agents are giving kickbacks to buyers or the buyers’ relatives or friends to entice them to commit to the purchase, while successfully inflating the transaction prices.
There are two loopholes in this malpractice: (1) False reporting of transaction prices is a breach in the developer’s loan agreement with the bank. So far there is no whistle-blower from any party involved in the process. (2) Kickback is against the Code of Ethics and Professional Client Care of the Council for Estate Agencies. There should be disciplinary action by CEA on agents with such misconduct.