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Old 20-12-2003, 11:57 AM   #106
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Fm ST, 20 Dec 2003

Low demand? Let singles buy HDB skyscraper flats

I REFER to the article, 'If demand is bad, HDB won't build' (The Sunday Times, Dec 7).

I am shocked that HDB may scrap the plan to build the 50-storey blocks in Tanjong Pagar after conducting an international competition to find the best design for the skyscrapers.

I am sure many Singaporeans share the disappointment of ARC Studio's Mr Khoo Peng Beng, the award winner for the best design, if the project is dropped or shelved.

It is not only a unique project in a good location, as National Development Minister Mah Bow Tan has said, but also a national landmark and a potential tourist attraction.

I agree with Mr Khoo that it would be a shame if all the special features in the design were thrown out. After all, these are the features which make the project outstanding.

HDB must be prepared to pay for the cost of the features if it wants the design to be different from that of its current flats.

If HDB can afford to spend millions of dollars on upgrading flats islandwide - some wasteful because the features added are purely decorative and not practical - I cannot see why it could not cough up the extra money for the special features of the skyscrapers, which will be the pride of its successful housing projects.

It does not make sense for the housing authority to hold an international design competition and then cite cost and low demand for not implementing the design concepts.

If indeed there is low demand for HDB flats, why has the housing authority increased the number of flats to be built next year from 800 units to 7,000?

HDB can easily overcome the problem of low demand by allowing singles to buy new flats. I am sure the demand for the 50-storey flats would be overwhelming if the flats are made available to singles.

It is time HDB stops using the same old and tired argument of land scarcity to justify its restriction on singles buying new flats as it is now possible to build flats of up to 50 storeys or more.

Neither should HDB continue to harp on its pro-family policy as an excuse to keep singles out as there are 10,000 unsold new flats.

In the past, it was the norm for applicants to wait for up to five years before they could own an HDB flat. Now, buyers can get a new flat almost immediately! So, I do not see the logic of HDB preventing singles from buying new flats.

Since the mere offer of a new flat is no longer an incentive for applicants to get married and procreate, HDB may want to consider the use of financial rebates for new flat purchases to promote its 'pro-family' policy and to boost demand. HDB could consider giving a $10,000 rebate for every child born - capped at, say, $40,000.

Yes, I support government policies giving financial incentives for procreation. But please do not take away the rights of singles to buy new flats from HDB.

Singles should be given equal opportunities to own a new flat as they contribute just as much, if not more, to the economy as their married counterparts.

It is time for the Government to recognise their efforts and give them a chance to get a bite of the subsidised-housing pie.

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Old 22-12-2003, 12:13 AM   #107
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Fm CNA, 21 Dec 2003

Title : Towner Heights residents say design flaw causes water seepage

SINGAPORE : Buildings are supposed to keep out the rain, but some residents living near Boon Keng MRT station are finding this is not so for their homes.

They aired these grievances to their MP when he officiated at the opening ceremony.

Brand new HDB flats at McNair Road.

Residents of block 108B and 108C had just moved into Towner Heights under the Selective En Bloc Redevelopment Scheme.

But they had a nasty surprise.

Mr Yong Tet Khoon, resident of Towner Heights, said: "Here once raining, even small rain or heavy rain, the water will pour in instead of seeping in. Sometimes we forget to close the window, the water start coming in and then we have to run back to close the window again."

Mr Yong said rainwater could sometimes wet his floor up to five feet from the window.

He believes it is because of a design flaw on the building's exterior.

Other residents agreed the problem was due to a concrete ledge that slants inwards, bringing the rain in.

Mr Peter Lal, resident of Towner Heights, said: "It is a structural problem, if you really want to see it from outside, it is a structural problem.....you can see the thing is curved in. If the thing is curved out, the water won't come in."

Dr Lee Boon Yang, MP for Jalan Besar GRC, said residents of the blocks would need to adapt to living in high-rise flats.

"What's structural, what's clearly defective in the design we will try to address, but they also have to understand that living in a high-rise means that they have to adopt certain habits. Don't expect to go out and leave your windows open and come back and nothing will happen," he said.

The twin 30-storey blocks are the highest in Boon Keng, and balloting for the remaining units was completed over a week ago. - CNA

Last edited by sunsetbay; 22-12-2003 at 12:15 AM..
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Old 22-12-2003, 12:19 AM   #108
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great job in keeping this thread alive:cool:
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Old 23-12-2003, 08:15 AM   #109
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Prices of big HDB flats set to dip further

Prices of big HDB flats set to dip further
Demand likely to be affected by new down payment rule from Jan 1, but smaller flats will stay popular

By Vladimir Guevarra

THE bigger the Housing Board flat, the more its price is likely to drop next year, say property experts.

They expect demand for five-room and executive flats to continue falling, and with them their prices, when a new rule requiring buyers to put down 2 per cent of a property's cost in cash kicks in on Jan 1.

But demand should keep on growing for three- and four-room flats, they say.

They are also predicting increases of up to 8 per cent for these properties.

Many home buyers have been opting for smaller flats this year because of the state of the economy.

That, plus the generally low interest in picking up property, and the Iraq war and Sars crisis, have prompted others to put off buying a home altogether.

The situation is so lacklustre that one market stalwart, Mr Mohamed Ismail, chief executive of real estate agency PropNex, forecasts the number of resale flats sold this year to be under 35,000 units, the lowest in at least the past seven years.

Whether he is right or not will be seen when the official fourth-quarter sales data is released next month.

Last year, a total of 38,343 resale flats exchanged hands.

But with the economy expected to improve, said Mr Mohamed, more than 37,000 resale units could be sold next year.

Property agency ERA Singapore president Jack Chua expects three- and four-room flats to continue to dominate transactions next year. These made up 76 per cent of all sales in the last three quarters.

An ERA report showed that smaller homes are so popular that some three-room flats in popular estates like Yishun saw price increases of 15 per cent over the past three quarters, to $155,600 this year.

Meanwhile, prices of executive flats, even in hot estates like Tampines, have dropped 11 per cent to $388,300 over the same period.

The report claims prices of smaller flats have gone up so much that any further increase would be 'marginal'.

But PropNex's Mr Mohamed is among those brokers who think otherwise, seeing increases of between 5 and 8 per cent for smaller homes because of demand from a younger generation of home buyers, married couples and downgraders.

He added that the lack of buyers for the bigger units and the 2 per cent cash down payment may lower the price for five-room flats by 3 per cent, and for executive flats, by 5 per cent.

Already, some sellers are re-adjusting their asking prices.

Sales manager Tony Lim, 48, who bought a 1,470 sq ft executive flat in Bedok four years ago for $470,000, is trying to sell it for $420,000 - but no one is biting.

'Realistically, in today's market and with the new policies, if people offer $410,000, I should consider it.'
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Old 24-12-2003, 11:27 PM   #110
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Fm ST, 21 Dec 2003

Downgrading blues

Downgrading isn't as simple as it might seem. You need a clean repayment record, a minimum income and cash for downpayment of the next home

By Leong Chan Teik

IF YOU are struggling to pay your bills and have even defaulted on some debt repayments, you may think that downgrading your home is a good idea.

The irony is that your plight may mean that downgrading is hard to do. You need a clean repayment track record, a monthly income above a certain level and enough cash for the downpayment for the next home.

Here's why:

First, the Credit Bureau has records of your late payments or defaults on bank loans and credit card bills.

That may be news to you, as it is to many people who are still unaware of the existence of the bureau, which started operations in October last year.

Second, under new eligibility conditions for HDB loans from January this year, you may have to get a loan from the bank.

Unlike the HDB from whom you would have expected a loan without fuss, banks are a different animal. They ask: What is your repayment track record?

The answer is expeditiously supplied at the press of a button by the Credit Bureau.

And if the answer is unsatisfactory, the bank will reject your application for a home loan.

Take the case of John and Joan (not their real names), whose story is related by ERA Realty associate sales director James Lee.

The couple sold their five-room HDB flat in Tampines for $330,000 in July.

Then John paid $1,000 as deposit for a four-room flat and applied for a $150,000 loan.

On checking with the Credit Bureau, the bank learnt that another bank had sued John over his credit card debt of $8,000, and the matter had not been resolved.

The bank rejected his loan application even though he has more than $100,000 in his Central Provident Fund account.

His steady income - he earns $2,500 a month as a civil servant - counted for little in the eyes of the bank. He is in his 40s and is the sole breadwinner for his family of four.

John and his family are now staying temporarily with relatives - and trying to figure out how to resolve his credit card problems.

Mr Lee, the ERA agent, says five of his clients have been rejected by banks in the last three months.

Mr Sazali Sarwan, a senior associate director of PropNex, the biggest realtor in Singapore, says he has four similar cases on his books.

His clients' financial troubles, detailed in the Credit Bureau's records, involve credit card debt, and legal suits by companies that offer instalment repayment schemes for purchases of their products.

Banks such as OCBC which reject loan applications in such cases point to several key factors.

It says that in processing applications for home loans, a key consideration for most banks would be the would-be borrower's ability to service the loan from a regular income stream.

Another major consideration: how debt-laden is the borrower?

'Most lenders generally will not give out additional credit to borrowers who are found to have difficulty servicing their debt,' says Mr Gregory Chan, OCBC's head of secured lending.

Mr Lee of ERA knows of cases where people are rejected just before the completion of the legal process for buying a flat.

'This is devastating to families who have waited three months to get the keys to their new home, and were told at the last minute that their loan has not been approved.

'This has never happened with HDB loans in my 10 years of experience as an agent.'

Another fix that buyers can find themselves in is when their applications are rejected after they have already exercised the option to buy the flat - typically two weeks after accepting the option. The seller could sue them for not proceeding with the purchase, says a source.

Mr Sazali of PropNex has two clients who had exercised their options to buy only to have the banks decline their loan applications. The clients' offer of securing guarantors for the loan was rejected. 'The bank says that it is not a guarantor issue but the applicant himself must be credit-worthy,' he says.

Mr Mohd Ismail, chief executive of PropNex, says the most common cause of bank rejections is credit card defaults.

There is little scope for these people to get around the problem.

'A bank advised one of my clients to settle his credit card bill first, or at least get a lawyer to give an undertaking that part of the sale proceeds from the flat will be used to settle the credit card bill,' he says.

That's not the only challenge that has surfaced for HDB home buyers. Some HDB buyers are not aware that banks require them to have a minimum level of income, says Mr Lee of ERA.

The HDB, in contrast, does not have minimum income requirements nor any dealings with the Credit Bureau.

The minimum income requirement varies from bank to bank - the lowest is $1,500 a month at DBS Bank, according to a Sunday Times check.

In the case of joint applicants, one of them should be earning at least $1,500 if they want an HDB loan from DBS.

At United Overseas Bank, single applicants need to be earning at least $30,000 a year, or $2,500 a month. For joint applicants, the minimum joint income is $30,000 a year, and one of the borrowers must have a minimum income of $18,000 a year.

If money is tight, downgrading your home won't get easier when 2004 arrives in just over a week.

Under an HDB rule, people who buy flats using a loan from a bank have to pay 2 per cent in cash as downpayment.

Those affected will include owners of flats bought at, or close to, the peak of the property boom in 1997.

These homes would fetch lower prices than what they were bought at, so the owners would not be getting surplus cash back from the sale to fund the 2-per-cent downpayment.
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Old 28-12-2003, 04:23 PM   #111
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Post Prices of 3- and 4-room HDB resale flats seen to rise further

Fm CNA, 22 Dec 2003

Prices of 3- and 4-room HDB resale flats seen to rise further

By : Katherine Tay, Channel NewsAsia

SINGAPORE : While private home prices slumped to four-year lows in 2003, those of many public Housing Board flats have been rising.

And experts are forecasting further gains next year, particularly for smaller three- to four-room resale units which they say could rise at least 5 per cent in value.

But it's not such good news for larger HDB flats, due to a lingering supply overhang.

Last year, about 38,000 resale HDB flats were transacted.

That could drop by 5,000 units this year.

PropNex's chief executive Mohamed Ismail attributed this to the "weak economy, the retrenchments, people who want to upgrade to a bigger flat have become cautious and want to wait for a better climate."

HDB has about 17,000 unsold flats.

Meanwhile, demand for the smaller resale flats will continue to be healthy next year.

"There is no new supply of 3-room flats and such flats will also see strong interest from both retirees, some downgraders as well as young couples," said Nicholas Mak, associate director of Chesterton International.

So, it's not surprising to see prices of 3- and 4-room resale flats going up next year.

But the bigger flats are not as popular as the smaller flats.

PropNex said over 1,000 bigger flats changed hands this quarter.

PropNex thinks now is the best time to buy the bigger flats because there isn't much demand and so it's truly a buyer's market.

As for sellers, Chesterton think they should not overprice their flats.

Nicholas Mak, associate director of Chesterton International, said: "If they really do need to sell, they should be more realistic. For 5-room flats, they are mostly transacting near the valuation level. As for executive flats, the price quantum is fairly similar to some of the mass market suburban condos, so some buyers would rather go for suburban condos than buy executive flats, that's why some executive flats are transacting at the valuation of somewhere between 2 and 5 percent below valuation."

Overall, property agents think the resale market will pick up, especially given the 2% cash downpayment rule will kick in next year for those taking a bank loan for the flat.

PropNex's chief executive Mohamed Ismail said: "The 2% rule, the following year it is going to be 4 percent and it will inch up all the way to 10 percent in 2008. Therefore, if anyone has the intention to change to a bigger flat or downgrade, 2004 is still a good year compared to if you wait further, there will be further constraints."

Besides the new rule, the expected economic recovery next year will also give the resale market a shot in the arm. - CNA
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Old 31-12-2003, 03:42 PM   #112
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Thumbs down defects

Fm ST, 30 Dec 2003

Water, water everywhere

THE past two years have been distressing as my husband and I had to deal with defects in our apartment in Sengkang.

Our common bathroom had to be hacked and re-tiled as there was water leakage to the flat below. In addition, our master bedroom had two deep cracks in the walls that allowed water to seep into the room and onto the floor. These cracks caused the paint on the walls to open up and peel off. It has been frustrating as we had to buy paint to cover the cracks once repairs were done, and unnecessary time was wasted while we waited for the bathroom flooring to be done again.

We are now concerned we cannot carry out further renovation works to our flat in the event that there are future defects.

I hope the HDB will look seriously into this matter and make sure all renovation works are completed with the highest standard of quality.

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Old 31-12-2003, 03:48 PM   #113
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Thumbs down poor workmanship

Fm ST, 30 Dec 2003

HDB should review quality of workmanship

RECENT incidents involving loose windows in Housing Board flats have generated concern over a seeming decline in the quality of HDB workmanship.

Friends and colleagues I have spoken to agree there is vast improvement in the design of HDB flats, but other aspects such as quality of workmanship and materials used have taken a plunge.

A friend of mine who recently collected the keys to his new flat in Woodlands was shocked when he first entered his unit. There were visible cracks, and paint and concrete were peeling and falling from the walls. Further checks revealed hollow sounds from the tiled floor, indicating poor workmanship.

My friend notified the HDB of his problems and his flooring was re-tiled after some repair work. However, the problems persisted - and got worse.

After my friend complained to the HDB that one of the new tiles was damaged, the worker who replaced it did not seem to think it mattered one iota if it was a different colour - as long as the tile was being replaced.

After my friend brought his problems to the attention of the contractor engaged by the HDB, he was given short shrift and reminded not to set his expectations too high!

While all this was going on, six months had passed and my friend could not move in as these problems had yet to be resolved. His hopes of moving into his new home before the New Year are apparently dashed and he has to stay in temporary accommodation.

Further checks revealed that other new residents in the same block face similar problems.

These encounters show the HDB lacks a proper system of checks and balances to ensure works carried out are monitored constantly to ensure workmanship is not compromised by lackadaisical workers or contractors.

The HDB should also allow applicants to view their allocated unit before they are given the keys. This will ensure they do not face workmanship problems before they become owners.

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Old 02-01-2004, 09:21 AM   #114
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Resale flat buyers rushing to beat 2% cash downpayment next year

Backdated to 29 Dec 2003

SINGAPORE : More home buyers are in the market for resale HDB flats this year-end as they try to beat the 2 percent cash downpayment requirement which kicks in from January.

Agents said they expected sales to hit about 10,000 for the last quarter of this year, compared to about 23,000 sold in the first nine months of the year.

From January, buyers of resale flats have to put down 2 percent in cash as a downpayment.

So some are hoping to complete their purchases before the year ends, especially for the larger flats.

Analysts feel this is the best time to buy five-room or executive flats.

Demand for these flats has been low, so buyers will have more bargaining power.

Sellers, on the other hand, are also anxious as prices for executive flats could dip another 5 percent next year.

Despite this, agents feel demand in the HDB property market will not be affected by the 2 percent cash requirement next year.

Mohamed Ismail, Chief Executive of PropNex, said: "The 2 percent rule, the following year is going to be 4 percent and it will inch all the way up to 10 percent in 2008. If anyone has the intention to change to a bigger flat or downgrade, year 2004 is still a good year compared if you wait further, there will be further constraints."

Four-room flats remain the hottest property in town.

Analysts said demand for these resale flats would continue to be strong next year as the trend to downgrade continues.

But it is also because resale flats continue to look attractive, and first-time buyers can also use the $40,000 CPF grant.

Mohamed Ismail added: "Some do not like new HDB flats because it's like a pigeon-hole. A 5-room flat is almost the comparable size of a 4A model of older flats. So why am I paying the price of a 5-room and stay in a new town so far away from my relatives?"

Nicholas Mak, Associate Director of Chesterton International, said: "There is also no new supply of 3-room flats and such flats will also see strong interest from both retirees, some downgraders as well as young couples."

Unlike bigger flats, prices for 3- and 4-room resale flats are expected to rise by another 6 percent to 8 percent next year. - CNA
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Old 03-01-2004, 10:50 AM   #115
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Post another delay....

Fm ST, 2 Jan 2004

What options if flat delayed?

IN OCTOBER, the Housing Board wrote to me to say that the completion of my flat at Bukit Batok West Avenue 5 had been delayed by a month.

Recently, I called the HDB as I had yet to receive my second appointment letter.

I was told by the customer service manager that my flat had been delayed for a further two months to March.

He also said that there was nothing I could do in terms of seeking compensation from the board.

I agreed with him as I had not heard of anyone being awarded compensation from the HDB when they were inconvenienced by such a delay.

However, I recall that in September, when the delay in the completion of Sengkang flats was reported, some of the affected buyers were offered finished homes in other areas of their choice while others were asked to rent an HDB flat while they waited.

I would like to know what alternatives are available to my wife and me.

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Old 03-01-2004, 10:53 AM   #116
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Post resale prices up....

Fm ST, 2 Jan 2004

HDB resale home prices up slightly

By Vladimir Guevarra

HOUSING Board resale prices continued to increase towards the end of last year, while the slide in private home prices has slowed down.

Fourth quarter prices for resale HDB homes were up 1.2 per cent over the third quarter.

Advance estimates from the HDB on Friday gave the resale price index for the fourth quarter as 103.9 points, 7.4 per cent higher than at the end of 2002.

Preliminary figures from the Urban Redevelopment Authority indicate that private property prices are still sliding, albeit at a slower pace, to levels unseen since early 1999.

The price index fell by a further 0.2 per cent to 112.7 points in the fourth quarter, after falling 0.4 per cent in the third quarter.

Over the whole year, the index retreated 2.1 per cent .

ERA Singapore president Jack Chua said that transaction records of his property agency show that three-room and four-room HDB flats remain the most popular with home owners downgrading from bigger flats and private properties.

Read The Straits Times on Saturday for the full story.
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Old 03-01-2004, 10:57 AM   #117
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bet mr chew will find it disappointing...

FM ST, 02 Jan 2004

HDB rules for singles have been relaxed

I REFER to the letter, 'Low demand? Let singles buy HDB skyscraper flats' (ST, Dec 20), by Mr Chew Chee Meng.

He suggested letting singles purchase new Housing Board flats, if there is concern about low demand for the new flats at Duxton Plain.

The Government's objective is to encourage marriage and procreation.

Therefore, our public housing policy is pro-family in orientation and priority is given to families who have a greater need for housing than singles.

Nonetheless, we do recognise that some older Singaporeans who remain single may prefer to live on their own.

Hence, we have relaxed our housing policies over the years to better meet the housing needs of singles.

Currently, single citizens aged 35 years and above can buy three-room or smaller resale HDB flats anywhere to live on their own.

Those who wish to own bigger flats can do so jointly with other eligible singles.

Singles can also obtain a housing grant for their flat purchase, and are not denied a bite of the subsidised-housing pie as Mr Chew said.

The Government needs to adopt a long-term view in managing and optimising the available financial and land resources available for public housing.

Although the HDB currently has surplus flats, this is a temporary situation due to the economic downturn.

To address this, the HDB has in the past two years actively promoted the sale of these flats through Walk-In Selection and scaled back new housing supply, which is offered via a Build-to-Order (BTO) system.

Under the BTO, flats will not be built unless there is sufficient take-up. Offering Duxton Plain via the BTO will ensure that there is demand for the flats before they are built.

If the response is not good, the HDB will have the flexibility to defer the project until market conditions are better.

It would be a waste if the HDB builds the flats only to have empty unsold units remaining after completion.

Mr Chew also commented that the HDB must be prepared to pay for the additional cost of the features if the design of the project is to be unique.

Although the intention is still for the flats at Duxton Plain to be unique, the final design must also be cost-effective, easy to build and easy to maintain.

Thus, the HDB is working closely with the winning architects to refine the conceptual design to strike the best balance between ensuring affordability and ease of construction and maintenance, and preserving the integrity of the original design concepts.

The costs of the project, both development and recurrent, will ultimately be borne by flat-buyers.

We thank Mr Chew for his feedback.

Senior Public Relations Officer
For Director
Corporate Development
Housing and Development Board

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Old 03-01-2004, 11:00 AM   #118
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Post ..continue from yesterday article...

demand for 5 rms may be up...

Fm ST, 03 Jan 2004

HDB resale flat prices up again

Fourth quarter prices up 1.2% over third quarter; private home prices sliding but at a slower pace

By Vladimir Guevarra

HOUSING Board resale prices continued to increase towards the end of last year, while the slide in private home prices has slowed down.

Fourth quarter prices for resale HDB homes were up 1.2 per cent over the third quarter.

Advance estimates from the HDB yesterday gave the resale price index for the fourth quarter as 103.9 points, 7.4 per cent higher than at the end of 2002.

Preliminary figures from the Urban Redevelopment Authority indicate that private property prices are still sliding, albeit at a slower pace, to levels unseen since early 1999.

The price index fell by a further 0.2 per cent to 112.7 points in the fourth quarter, after falling 0.4 per cent in the third quarter.

Over the whole year, the index retreated 2.1 per cent .

ERA Singapore president Jack Chua said that transaction records of his property agency show that three-room and four-room HDB flats remain the most popular with home owners downgrading from bigger flats and private properties.

Over the past two weeks, ERA agents had seen a surge in transactions as home buyers rushed to lock in their deals before a new rule, which requires them to put down 2 per cent in cash, took effect on Thursday, Mr Chua said.

First-time buyers, he noticed, shunned five-room and executive flats because of uncertainties over the economy, retrenchments and cuts in the Central Provident Fund contribution rates.

The same reasons made those who bought private homes also avoid high-end properties, focusing instead on 99-year leasehold condominiums such as Icon in Tanjong Pagar and Grandeur 8 in Ang Mo Kio, which were more affordable.

Developers managed to sell only about 5,000 units last year, about half of the 9,500 they sold in 2002, analysts said.

Mr Chua said prices of smaller HDB flats have already reached 'resistant levels' and any further rise would be 'marginal'.

So, interest in five-room flats may pick up, from people looking for homes larger than four-room flats, and from people downgrading from private properties.

Knight Frank executive director Peter Ow said that with the economy recovering, more than 6,000 private homes may be sold this year.

'The increase will be more in sales than in prices,' said Mr Ow, who thinks private home prices could rise by up to 5 per cent this year, which he described as a 'fairly muted' increase.

But Chesterton International said it expects a 'small increase' of between 1 and 4 per cent.
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Old 04-01-2004, 11:42 PM   #119
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just one year after it's implementation, already there's default bank loans.

Fm ST, 04 Jan 2004

Flat buyers default on bank loans

Despite record low interest rates, banks have defaulters just one year after the HDB home loan market was opened up

By Irena Josoeb

THE banks were wooing potential customers with hard-to-resist interest rates for the first two years and freebies galore. And it worked. In the first year that the loan market for Housing Board flats was opened up to private banks and financial institutions, 23,000 flat buyers took the bait, according to HDB.

Banks went all out to woo potential clients when the HDB home loan market was opened up. But already, financial institution say there are defaulters although the numbers are still small.

But already some banks say they have had people default on the loans. Four banks said they have defaulters but none of them has repossessed any HDB flat - yet.

The HDB home loan market was opened to banks in January last year. That was when HDB stopped giving loans at market interest rates to flat buyers who do not qualify for its concessionary loans. An estimated 20,000 owners would take up such loans each year.

Bank loans were also available to other HDB flat buyers who qualify for HDB's concessionary loans, and to those who wanted to refinance their flats.

The move opened the floodgates - banks were outdoing each other, revising their interest rates downwards until they hit a low of 1.55 per cent for the first year, compared to HDB's 2.6 per cent concessionary rate and its 3.75 per cent market rate.

Then there were the freebies thrown in. Some banks offered to pay part of the legal fees flat buyers would incur, others offered pre-approved renovation loans, and some even threw in mobile phones.

After the feeding frenzy, banks now have to contend with loan defaulters. Of the eight banks contacted, five responded. And only one - ABN Amro - said none of its HDB customers has defaulted.

DBS, OCBC, UOB and Maybank did not want to give numbers but said the numbers are small. DBS, a key player in the market, said retrenchment was not the main reason for HDB loan defaults. Rather, said a spokesman, the defaulters appeared to need 'strict discipline' to ensure they paid on time.

The spokesman added that those who defaulted on their loans were from the lower income group, who mostly owned smaller three-room flats.

Another big player, OCBC, said its defaulters were mainly people who had lost their jobs.

Property analysts are not surprised but added that the banks will not continue to be so kind.

'I do expect a degree of default in any loan situation so a handful is no real surprise. In any state of economy, there will always be defaulters and times have been tough,' said Knight Frank executive director Tay Kah Poh.

'However, if this persists and the number of defaulters grows significantly, that becomes a cause of worry.'

On banks not repossessing flats, Debenham Tie Leung (SEA) chief executive Ho Tian Lam said: 'None of the banks want to be the first to take action against the defaulters because it's bad publicity for them. But slowly and surely, they will have to, it's just a matter of time.'

All the five banks said they discuss with defaulters to work out a repayment plan that takes into account their repayment capability. Measures include deferring repayment of the principal sum and adding family members as co-borrowers and guarantors.

The banks appear to be taking their cue from the HDB, which has a slew of measures to help those who are in arrears with payments.

The board said there was a slight increase in the number of people who have not paid up.

As at Nov 30, about 24,700 households were in mortgage arrears of three months or more. This represents 4.8 per cent of the 520,000 households with outstanding mortgage loans, about 0.8 percentage point higher than nearly a year earlier.

The reasons? The economic downturn and rising unemployment rates, an HDB spokesman said. To help, the board offers financial measures such as allowing borrowers to pay the arrears in instalments within a reasonable period and extending the loan term up to the maximum repayment period.

HDB mortgagers can call 1800-866-3030 for advice on suitable financial assistance measures.
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Old 04-01-2004, 11:47 PM   #120
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some property news... may not have alot of impact to most.

Fm ST, 04 Jan 2004

Home sweet rental home

Some Singaporeans are forgoing home ownership as they discover that renting a place really costs less than buying one

By Leong Chan Teik

RENT a home or buy one? Once, to even raise the question would have seemed laughable, given that Singapore has one of the highest levels of home ownership in the world.

As well, until a few years ago the attractive capital gains to be made from owning a home made renting seem like a waste of good money.

But now, with rents having fallen sharply, it may make sense, not to mention, dollars and cents, to rent.

The question of whether to rent or buy is especially pertinent for those who are potentially first-time home owners, with rents literally at bargain-basement levels.

Rentals are down by around 45 per cent on average in the last seven years, according to industry data.

That is sharper than the 35 per cent fall in property prices.

The rent for a two-bedroom unit in Costa Rhu condominium, for example, has fallen to $1,700 from $3,500 about five years ago, says ERA property agent Samuel Lee.

People are discovering that renting really costs less than buying. In other words, for the same property, the rent is less than the cost of paying the interest on a bank loan, property tax, maintenance, and fire and mortgage insurance.

'You don't have to do complex calculations. I can tell you, you would be better off renting,' says Mr Leong Sze Hian, a board member of the Society of Financial Services Professionals.

In the HDB market, lower-income earners (less than $1,500 a month in household income) have predominantly been the renters. The flats are one or two-room units rented directly from the HDB.

The entire supply picture has just been transformed. From Oct 1 last year, a change in HDB policies has qualified owners of 250,000 flats to sublet their entire flats.

Renting a home appears to be an attractive proposition financially, and even more so from this year for people who buy HDB flats using a bank loan and don't have money for the new 2 per cent cash downpayment requirement.

The quantum of cash for downpayment will increase by two percentage points a year until it reaches 10 per cent, posing a big challenge to first-time home owners, especially.

The rent-or-buy equation is more complex than it appears on the surface. In addition, the property market can change dramatically in future. Consider the following points:

How long will today's low rental rates prevail?

A rise in rental rates cannot be ruled out as affordability goes up when the economy recovers, jobs become more bountiful and salaries rise.

Problem is, no one knows when all these will happen.

'A few days ago, Prime Minister Goh Chok Tong said he could feel the economic recovery in his bones already but most people can't,' says Mr James Lee, associate sales director of ERA Realty.

Will interest rates rise?

A rise in interest rates, which are at record lows now, is almost a certainty. When it finally happens, servicing a housing loan will become more expensive. Everything else being the same, higher interest makes renting more attractive, says Mr Leong.

That, however, is negated if the landlord raises rental rates.

Has the property market hit bottom and will it rise?

Property agents such as Mr Samuel Lee say some people have sold their property and turned to renting in the hope of buying a property when the market softens.

So far, they have been rewarded as the downtrend has continued.

But the significant 35 per cent or so decline in property prices in the last seven years could reverse sharply if buying sentiment improves.

Property consultants reckon the market is scraping bottom.

It could be kept down by recently-introduced government policies which have the effect of shrinking your affordability to buy property.

Firstly, cuts on various aspects of the Central Provident Fund (CPF) contribution are being phased.

Secondly, there are tighter limits on how much you can take out of your CPF account to repay your property loan.

From Jan 1, 2008, you cannot use CPF savings to pay for more than 120 per cent of the value of property bought then. The limit was 150 per cent when it was introduced last year.

Does buying a property improve your cashflow?

When you buy a property, you can service the entire monthly repayment using your CPF inflows. You don't have to come up with cash.

If you rent, you pay cash as you cannot touch a single cent of your CPF savings.

Renting, on the other hand, means you commit less money every month to a home. Take a 1,000-sq-ft apartment in The Bayshore, for example, says property agent Samuel Lee.

Rent of $1,200 a month includes maintenance and property tax.

If the same unit were purchased, the monthly instalment is around $1,300 on a 30-year loan. Maintenance ($250 a month) and property tax ($100 a month) are extras. Then there are major one-off expenses including furniture and renovation.

Are there other assets you can obtain better returns from?

If you have some expertise in getting good returns from investing in your business or in the stock market, then buying a property may be a less attractive option than renting.

Mr James Lee of ERA points out that the Singapore real estate market is becoming mature, so you can forget about a major boom like what Singapore experienced in the 1990s.

'I think more people will look at other investments to get better returns, and may opt to rent instead of buy their own property,' he says.

Ultimately, the issue may not be one of renting versus buying.

The issue may be one of buying a modest home or, put another way, one that is well within your means.

If you don't over-stretch yourself financially in buying a home, you would have reserves to invest in stocks and unit trusts, or your business.

You don't have to worry about the uncertainty of property prices and rentals.

If you are young and restless, renting is an attractive option for non-financial reasons. You can pack up and move whenever you want for a change of scenery, neighbours and lifestyle.
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