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Are new property measures too little, too late?
By PropertyGuru – September 2nd, 2010
By Khalil Adis (courtesy of PropertyGuru)
The Singapore government has followed in the footsteps of China and Hong Kong to cool down its property market, specifically for public flats.
The latest measures appear to be aimed at speculators who are partly blamed for driving Housing Development Board (HDB) resale prices upwards.
In case you don’t already know, prices of HDB flats are now at a record high.
According to figures from the HDB, the Resale Price Index (RPI) had increased by 4.1 percent to reach 161.3 points in the second quarter. This means HDB resale prices are now at their highest point since the HDB began tracking data on the RPI since the first quarter of 1994.
Meanwhile, the median Cash-Over-Valuation (COV) levels rose by a whopping 20 percent to reach S$30,000 in the second quarter. This is some S$5,000 jump from the first quarter.
The rising prices of HDB flats are a cause for concern as first-time homebuyers like young couples and singles have found themselves priced out of their affordability range.
Some have resorted to renting an HDB flat from the open market which runs counter to HDB’s mission statement to provide affordable homes for all.
With some complaints on the ground and elections looming, it came as no surprise that on 30 August 2010, the HDB finally announced new measures to help ensure flats remain affordable for first time Singaporean homeowners.
Property bubble forming
The fears that a property bubble is forming in the HDB market are very real.
As far back as two years ago, some Singaporeans were already raising alarm bells via online forums that a number of permanent residents were taking advantage of their eligibility to buy resale flats to jack up prices.
According to figures from the HDB, the highest rate of increase occurred in 2008. This corresponded to the year when the government welcomed over 20,000 new citizens and 90,000 permanent residents, but the HDB only built 3,183 flats. In addition, Singaporeans also jumped onto the bandwagon by selling their flats to make a quick profit from the red-hot HDB market.
This drove property prices upwards.
Data from Global Property Guide confirmed that Singapore is the hottest real estate market in the world.
Property prices have soared by 34 percent in the past 12 months ending June this year. Prices of HDB resale flats have been increasing steadily from the second quarter of 2003. It has now risen 60 percent since the second quarter of 2003.
Meanwhile, according to a study by UBS, wages have not gone up in tandem, brought about in part by the influx of foreigners.
Cooling measures
So how will the new cooling measures affect you? Well, it only affects those who already have a home and not first-time homeowners.
For those of you selling your flats within the first three years, a stamp duty will be imposed, up from one year.
If you currently live in an HDB flat and want to buy another, you need to pay 10 percent cash up front, up from the original 5 percent. In addition, you can only borrow up to 70 percent of your HDB flat value, down from 80 percent.
For those of you who already own an HDB flat and want to buy a private property, you are not allowed to buy during the minimum occupation period (MOP) which has been increased from three years to five years.
For those of you who already own a private property and want to buy a non-subsidised HDB flat, you must sell your current property within six months from the date of your flat purchase.
There’s also good news for the sandwiched class as those earning between $8,000 to $10,000 a month can now buy new Design Build and Sell Scheme (DBSS) flats with a $30,000 CPF Housing grant.
The MOP has also been increased for non-subsidised flats from three years to five years. This would deter speculators from flipping their properties and denying an opportunity for those in dire need of a home.
To buy or sell?
While the Singapore government has promised it will offer more than 16,000 new flats this year and 22,000 new flats in 2011, I feel the measures have come a tad bit too late.
A few questions remain. For instance, why did the HDB not have the foresight to build sufficient flats when the government was increasing the size of the population via immigration?
Nevertheless, the new supply coming on-stream is good news for first-time homeowners.
However, you do need to wait for two-and-a-half years before you can move into your home.
The bad news is for those of you trying to sell your flats.
With new supply coming on-stream by 2013 and 2014, prices of resale flats are expected to drop during this period. My advice is to sell before 2013 to 2014, provided you have fulfilled all of HDB’s criterias.
Khalil Adis is an experienced property writer, with in-depth knowledge of Singapore’s and Malaysia’s property market.
Read more property news at PropertyGuru
.
Are new property measures too little, too late?
By PropertyGuru – September 2nd, 2010
By Khalil Adis (courtesy of PropertyGuru)
The Singapore government has followed in the footsteps of China and Hong Kong to cool down its property market, specifically for public flats.
The latest measures appear to be aimed at speculators who are partly blamed for driving Housing Development Board (HDB) resale prices upwards.
In case you don’t already know, prices of HDB flats are now at a record high.
According to figures from the HDB, the Resale Price Index (RPI) had increased by 4.1 percent to reach 161.3 points in the second quarter. This means HDB resale prices are now at their highest point since the HDB began tracking data on the RPI since the first quarter of 1994.
Meanwhile, the median Cash-Over-Valuation (COV) levels rose by a whopping 20 percent to reach S$30,000 in the second quarter. This is some S$5,000 jump from the first quarter.
The rising prices of HDB flats are a cause for concern as first-time homebuyers like young couples and singles have found themselves priced out of their affordability range.
Some have resorted to renting an HDB flat from the open market which runs counter to HDB’s mission statement to provide affordable homes for all.
With some complaints on the ground and elections looming, it came as no surprise that on 30 August 2010, the HDB finally announced new measures to help ensure flats remain affordable for first time Singaporean homeowners.
Property bubble forming
The fears that a property bubble is forming in the HDB market are very real.
As far back as two years ago, some Singaporeans were already raising alarm bells via online forums that a number of permanent residents were taking advantage of their eligibility to buy resale flats to jack up prices.
According to figures from the HDB, the highest rate of increase occurred in 2008. This corresponded to the year when the government welcomed over 20,000 new citizens and 90,000 permanent residents, but the HDB only built 3,183 flats. In addition, Singaporeans also jumped onto the bandwagon by selling their flats to make a quick profit from the red-hot HDB market.
This drove property prices upwards.
Data from Global Property Guide confirmed that Singapore is the hottest real estate market in the world.
Property prices have soared by 34 percent in the past 12 months ending June this year. Prices of HDB resale flats have been increasing steadily from the second quarter of 2003. It has now risen 60 percent since the second quarter of 2003.
Meanwhile, according to a study by UBS, wages have not gone up in tandem, brought about in part by the influx of foreigners.
Cooling measures
So how will the new cooling measures affect you? Well, it only affects those who already have a home and not first-time homeowners.
For those of you selling your flats within the first three years, a stamp duty will be imposed, up from one year.
If you currently live in an HDB flat and want to buy another, you need to pay 10 percent cash up front, up from the original 5 percent. In addition, you can only borrow up to 70 percent of your HDB flat value, down from 80 percent.
For those of you who already own an HDB flat and want to buy a private property, you are not allowed to buy during the minimum occupation period (MOP) which has been increased from three years to five years.
For those of you who already own a private property and want to buy a non-subsidised HDB flat, you must sell your current property within six months from the date of your flat purchase.
There’s also good news for the sandwiched class as those earning between $8,000 to $10,000 a month can now buy new Design Build and Sell Scheme (DBSS) flats with a $30,000 CPF Housing grant.
The MOP has also been increased for non-subsidised flats from three years to five years. This would deter speculators from flipping their properties and denying an opportunity for those in dire need of a home.
To buy or sell?
While the Singapore government has promised it will offer more than 16,000 new flats this year and 22,000 new flats in 2011, I feel the measures have come a tad bit too late.
A few questions remain. For instance, why did the HDB not have the foresight to build sufficient flats when the government was increasing the size of the population via immigration?
Nevertheless, the new supply coming on-stream is good news for first-time homeowners.
However, you do need to wait for two-and-a-half years before you can move into your home.
The bad news is for those of you trying to sell your flats.
With new supply coming on-stream by 2013 and 2014, prices of resale flats are expected to drop during this period. My advice is to sell before 2013 to 2014, provided you have fulfilled all of HDB’s criterias.
Khalil Adis is an experienced property writer, with in-depth knowledge of Singapore’s and Malaysia’s property market.
Read more property news at PropertyGuru
.