SRX: HDB Sept resale prices down again

Housing and Development Board (HDB) resale prices could have fallen in September for an eighth consecutive month, going by flash estimates from the Singapore Real Estate Exchange (SRX).

Its data shows HDB resale prices dipped 0.5 per cent last month from August, dragged down by price declines in three-room, four-room and five-room resale flats, which retreated 0.2 per cent, 0.2 per cent and 1.6 per cent respectively.

The price declines were largely within expectations, consultants say, as the dampening factors of a loan curb, purchase restrictions on Singapore permanent residents and an increased supply of new build-to-order (BTO) flats continued to weigh on demand.

“The demand and supply side measures implemented by the government continue to put a lid on any price increase,” said ERA Realty key executive officer Eugene Lim.

“Sellers and buyers are also more realistic now and so any price moderation is very marginal,” he said.

Executive flat prices bucked the trend in September by inching up 0.1 per cent over the month.

This could reflect that prices have already fallen to levels that better match buyers’ affordability. Some buyers on the sidelines saw it as an opportune time to get such flats since prices have fallen over time.

Overall resale volumes, however, improved as some 1,469 HDB resale flats were estimated to be sold in September, a 10.7 per cent increase from the 1,327 in August. This also marked a 19.9 per cent increase from a year ago.

The jump in volume could be attributed to the return of buyers who had earlier stayed away from the housing market during the Hungry Ghost Festival in August.

HDB rents will continue to face headwinds in view of tightened foreign worker policy and falling private property rents (especially in the Outside Central Region).

Last month, the rental market remained soft, with SRX estimates showing some 1,483 HDB flats rented in September, down 6.7 per cent from August and down 0.7 per cent from a year earlier.

Rental prices slipped 0.3 per cent month on month in September as the three-room, five-room and executive flats posted marginal rent declines of 0.5 per cent, 0.3 per cent and 0.8 per cent respectively. Compared to a year ago, overall rents in September were down 2.5 per cent.

More HDB upgraders have decided against selling their flats in view of the weak buying interest and are putting up their flats for subletting. They would hence have to offer their flats at very competitive rentals to attract tenants.

A forward-looking indicator of SRX showed that buyers of resale flats could be paying S$2,000 below SRX’s computer-generated market values.

For the whole of this year, resale HDB prices are expected to fall by 5-8 per cent, according to consultants.

Source: Business Times – 10 October 2014

Downpayment for new flats halved for some rightsizers

The Housing & Development Board (HDB) on Wednesday launched 4,630 new build-to-order (BTO) flats in September’s exercise.

These flats are spread across six projects in the non-mature towns of Bukit Batok, Hougang and Jurong West, and the mature town of Kallang Whampoa. Application for these new flats can be submitted online from Sept 24-30.

Starting from this BTO exercise, existing flat owners who rightsize to a new two-room or three-room flat in a non-mature town can choose to pay half the downpayment for the new flat when they sign the lease agreement.

This is to help flat owners who wish to rightsize to a new flat but have their funds tied up in the existing flat, HDB said.

“For those who are not taking up a loan or who are taking up an HDB loan, they need to pay only a 5 per cent downpayment upfront, instead of the current 10 per cent.

“For those who are taking up a loan with financial institutions, they need to pay only a 10 per cent downpayment upfront, instead of the current 20 per cent,” HDB said.

The remaining half can be paid together with the balance purchase price of the new flat when they collect the keys for the new flat.

National Development Minister Khaw Boon Wan in a blog post on Wednesday said he was “glad” with this policy change.

“At Meet-the-People sessions, I sometimes meet elderly residents who intend to rightsize to a smaller flat but face some cash-flow difficulties in the process.

“HDB told me that, in 2013, 47 elderly cancelled their new flat bookings, because they were unable to raise the downpayment. They must have felt disappointed, having to abort their plans because of a cash-flow problem,” he wrote.

With the change, sale proceeds from the existing larger flat will be enough to pay for the new smaller flat, provided that buyers sell their flat first to raise the funds for the new purchase.

The policy tweak is expected to be welcomed by the elderly, and even more so by adults who are approaching their retirement years in a decade’s time.

Recently, the government fine-tuned the lease buyback programme by adjusting the tenure that different elderly can retain upon opting for a lease buyback. This will inject flexibility into the scheme (announced on Wednesday).

Retirees-to-be will now likely be more open to rightsizing . . . An adult in his 50s who adopts this option might still be able to monetise his asset through lease-buyback 15-20 years later when he reaches around 70 years. Such a two-pronged asset-monetising approach is possible as our elderly profile gets more financially savvy and open-minded.

Flat buyers do not need to apply for the staggered downpayment scheme. HDB will extend it to those who are eligible.

In November, HDB will offer about 4,290 BTO flats in Sembawang, Sengkang, Tampines and Yishun. Another 3,000 flats will be offered in a concurrent Sale of Balance Flats (SBF) exercise.

Source: Business Times – 25 September 2014

Widening price gap for home upgraders

It is becoming harder than ever for Housing Board upgraders to make the leap to private property, despite softening prices.

The price gap between an HDB flat and one in a private condo has widened, hampering those who rely on resale proceeds to fund their new home – not least in the light of tougher home loan curbs.

A 2011 Goldman Sachs study found that the price gap in the first quarter of that year was $490 per sq ft, a record then. That means a 1,000 sq ft condominium unit would have cost $490,000 more than a resale HDB flat with the same floor area.

A five-room HDB flat is slightly larger than 1,000 sq ft.

New figures from the Singapore Real Estate Exchange suggest the gap has only widened since.

Their calculations put the gap in median resale prices at $383 per sq ft in the first quarter of 2011 but that had shot up to to $524 per sq ft by the second quarter of this year.

The gap is even wider for new private units, having risen from $556 per sq ft to $753 per sq ft.

These calculations were based on prices of HDB five-room flats and condominiums outside the central region, to reflect the typical upgrade.

It does mean that private housing for HDB upgraders is becoming more unaffordable.

But the growing gap is unsurprising, given the different trends in private and public property, said experts.

The Urban Redevelopment Authority’s resale price index shows that values of non-landed private property outside the central region have risen by 17.3 per cent overall since the first quarter of 2011.

The HDB’s resale price index rose only about 12 per cent over the same period.

Several rounds of government cooling measures have begun to bite, and both markets are now on a decline. But public housing prices have been falling faster – contributing to the widening gap.

HDB prices started falling after the second quarter of last year, and have dropped 5.3 per cent since then. The private property index started falling from the third quarter, and has lost 3 per cent since.

An analyst does not see this as cause for alarm: “I think it is not a major concern now because in the years of 2010 to the first half of 2013, there were ample HDB upgraders… Many HDB upgraders have already fulfilled their dreams of upgrading.”

Executive condominiums, which are bought as public housing but become fully private after 10 years, could also bridge the gap, as they are cheaper than private units.

Mr Jedric Goh, 34, is willing to be even more flexible as he tests market interest for his five-room flat in Serangoon.

In this market, going private would be “quite tough”, so he is not limiting his options that way.

“I’m looking at location instead of the type of property,” said Mr Goh, who works in the finance industry.

Source: The Straits Times – 24 September 2014

Upgrading programmes at HDB estates get a boost

Housing Board upgrading programmes were given a boost yesterday as the Government announced fresh moves to spruce up more neighbourhoods, touch up ageing flats and replace old lifts.

The enhancements are aimed at keeping ageing estates in good condition, National Development Minister Khaw Boon Wan said yesterday.

“Many residents with blocks and neighbourhoods that have not yet been upgraded are impatient,” said Mr Khaw, who was speaking at the HDB Awards ceremony at Shangri-La Hotel. “They, too, want to benefit from the new features immediately.”

The Government will be paying for most of these upgrading programmes.

One of the changes announced is to speed up the pace of the Home Improvement Programme (HIP), which addresses maintenance issues such as structural cracks in flats built in or before 1986.

Some 100,000 flats, out of the 300,000 eligible, will be selected next year. Over the next two years, 50,000 flats will be upgraded annually. This is up from the current 35,000 annually. Homes selected will have an option to include elderly-friendly fittings.

More than 120,000 flats have been offered the upgrade so far, with citizen households fully subsidised for essential upgrades. They pay between 5 per cent and 12.5 per cent of the costs for optional improvements, such as door replacements.

“Early selection of HIP blocks will… enable the owners to decide better whether to wait for the HIP or to proceed first with their own renovations,” said Mr Khaw.

The Neighbourhood Renewal Programme (NRP), which improves neighbourhood facilities, will also expand to include HDB blocks built between 1990 and 1995. Previously, this applied only to blocks built in and before 1989.

This means that another 100,000 households in more than 1,300 blocks, mostly in middle- aged towns like Chua Chu Kang, Pasir Ris and Tampines, will benefit from the programme.

The scope of improvements under the NRP will also be broadened to include block repainting and other repairs, which were previously done under the town councils’ routine maintenance.

The Government will also replace ageing lifts which were not targeted in the Lift Upgrading Programme, said Mr Khaw.

The new Selective Lift Replacement Programme will replace about 750 lifts mostly in Chua Chu Kang and Pasir Ris. The new lifts will come with better safety and security features, like vision panels and motion-sensing doors.

About 33,000 households will benefit from this programme, which will be funded by HDB and the town councils.

Chua Chu Kang GRC MP Zaqy Mohamad said his residents have been asking for such lift safety features for many years.

Statutory board manager Alex Seo, 31, said many residents who go home late at night will appreciate the vision panels.

Trainer Wong Peng Thim, 58, who lives in Block 232, Pasir Ris Drive 4, is looking forward to getting covered walkways and sheltered drop-off porches under the NRP. “Having no walkways makes it inconvenient for us to get home when it rains.”

Mr Khaw said the moves will raise the overall standard of living for residents.

“Every new HDB town should be better than the old town. Every old town should not be too far behind the new town.”

Source: The Straits Times – 11 September 2014

HDB details plans for three new housing districts

The Housing and Development Board (HDB) on Tuesday unveiled detailed plans for the first housing projects in Bidadari and Tampines North, as well as for Punggol Northshore – one of seven new waterfront housing districts in Punggol.

Punggol’s Northshore District will be the next one to be developed after the Matilda District. It will offer about 6,000 new flats, with the first project slated to be launched in 2015.

New technologies will be employed to make the district “smart and sustainable”. In fact, Northshore will be the first district to test-bed smart technologies in public housing.

It will feature intelligent car parks (which automatically increase the number of available lots during non-peak hours for visitors, as residents with season parking tickets are out in the day), smart lighting (lighting with sensors which will be reduced in common areas with little or no human traffic detected), and smart waste management (whose sensors will monitor waste disposal patterns before the data is analysed to optimise the deployment of resources needed for waste collection).

The smart waste management system will also be set up in the first housing precincts in Bidadari and Tampines North.

The Northshore District will also have varied building heights to capitalise on the sea views and a seafront commercial centre. Its blocks will also be installed with solar ready roofs.

HDB’s first public housing project in Bidadari will be in the Alkaff neighbourhood, and will be launched in 2015. It will feature community malls, garden courtyards, a verandah for recreational and community events, roof gardens and community terraces atop the multi-storey car parks and selected residential blocks.

As for Tampines North, the Park West District will be the first to be developed, comprising 1,500 flats. It will be launched in November this year. In fact, the four housing districts in Tampines North will be designed around a “leaf” concept, like an extension or “green shoot” of Tampines Town, each with its own comprehensive network of green spaces, HDB said.

Source: Business Times – 10 September 2014

Those outliving lease under LBS won’t be left homeless

The Ministry of National Development (MND) made it clear on Monday that under the Housing & Development Board’s (HDB) lease buyback scheme (LBS), those who outlive the remaining lease of their flat will not be left homeless.

The ministry is also studying the option of insurance for the elderly to insure against the likelihood of their outliving the lease.

Minister for National Development Khaw Boon Wan noted, however, that such an insurance scheme “cuts both ways”.

The benefits of such insurance are restricted only to a minority who outlive the lease, while there is downside for the majority, who will have to forfeit having any unconsumed lease refunded to their estate beneficiaries.

“Our commitment is nobody will be left homeless,” Mr Khaw said. “The HDB will look into the circumstances of each case to work out an appropriate housing arrangement, taking into account the elderly’s health condition, financial status and the availability of family support.”

Mr Khaw was fielding questions from Members of Parliament (MPs) who raised concerns about the elderly outliving their retained leases under the LBS, which allows the elderly to monetise their flat by selling the tail-end of the lease to the HDB.

MP Baey Yam Keng asked the Minister if the HDB could specify the value of lease extensions when an elderly signs up for the LBS. Mr Khaw explained that the government “cannot commit to something so uncertain” due to the market vagaries of property prices.

Those who are concerned about outliving their lease can take up the option of retaining a maximum lease of 35 years under the enhanced LBS from April next year, he said.

Under the enhanced LBS that kicks in next April, joint flat owners only need to top-up to half the age-adjusted Minimum Sum, which allows them to receive more proceeds in cash than before, but still subjected to a cap of S$100,000. The scheme is also extended to four-room flats and households with income of up to S$10,000.

Mr Khaw pointed out that as for LBS flat owners whose flats are selected for the Selective En bloc Redevelopment Scheme (SERS), they will receive compensation for the residual lease of their flat and also SERS rehousing benefits. Compensation for the residual lease will be based on either the market value or the stated refund value, whichever is higher.

Other MPs also asked how the HDB determines the value of the lease under the LBS.

Mr Khaw explained that the flat is valued by a professional private valuer appointed by the HDB, based on widely accepted industry standards and valuation practice. But how the value is split between the front-end retained lease and the tail-end sold lease is “not a straight line depreciation” due to the time value of money and that property with a shorter outstanding lease depreciates faster than one with a longer lease.

Going strictly by industry valuation standards, valuers are likely to value the tail-end of the lease much lower than the lease retained by the owner, Mr Khaw said. This is why the HDB disallows subletting of the entire flat or resale under the LBS, he added. “When valuers value the front-end of the lease to be retained, they take that into account and discount it, so instead of the 75-25 split, it then ends up roughly 60-40.”

The significant improvement of value of the tail-end lease sold to the HDB results in higher cash proceeds for the owners – making the LBS “a lot more attractive and meaningful to the owners”, Mr Khaw said.

He noted that the property cycle can affect all monetisation options, whether it is lease buyback, right-sizing or disposing the flat.

The key is to make sure that there is proper counselling so that the flat owners are fully aware of the options and do not rush into making a decision, he said.

Source: Business Times – 9 September 2014

Lease buyback: 75% of elderly HDB households can benefit

Three in every four elderly HDB households can benefit from the enhanced lease buyback scheme (LBS), up from 35 per cent previously. But a huge jump in take-up rates of the scheme is unlikely, said Minister for National Development Khaw Boon Wan on Wednesday.

Other enhancements to the LBS, which will also kick in from April next year, are aimed at offering households greater flexibility on the length of lease to retain and the amount of proceeds to be received in cash upfront – issues that naysayers of the scheme have earlier picked at.

Mr Khaw said that he expects the take-up rate for the enhanced scheme to increase by a few hundred or thousand, but not jump by “tens of thousands”.

Many residents that he spoke to in his Sembawang GRC hailed the LBS enhancements “a good idea” but expressed that they will not tap the scheme now as they are financially supported by their children or have passive income from subletting a room.

“But it does not matter whether it is a thousand or ten thousand. The scheme is there and we will make sure that it will be implemented the way we have described it,” Mr Khaw said.

The scheme has seen a low take-up rate since its inception in 2009, when it allowed elderly households in three-room or smaller flats to retain a 30-year lease and sell back the remaining to HDB. The sales proceeds are used to top up their CPF Retirement Account (CPF RA), which can in turn be used to buy annuity plan.

So far, only about 800 households have signed up for the scheme, of which some 340 households joined only after some enhancements were made in 2013.

According to MND, Singapore is in a sweet spot for the enhanced LBS given that 80 per cent of the 290,000 HDB flats owned by seniors aged 55 years and above are fully paid-up and sitting on net equity.

Besides extending the scheme to four-room flats, the government is raising the household income ceiling from S$3,000 to S$10,000. Households joining the scheme can also choose the length of the lease to retain, up to 35 years, based on their age and preferences, instead of having one standard 30-year lease.

Instead of topping up their CPF RA to the full age-adjusted Minimum Sum, joint flat owners need to top up to only half of their Minimum Sums. This allows joint owners to receive more cash upfront, but still subject to a cap of S$100,000.

But Mr Khaw urged the elderly to exercise prudence with the excess cash proceeds – a point that he also stressed in his blog on Wednesday.

“While these enhancements are good, I do worry about some elderly spending unwisely away the substantial cash proceeds,” he blogged. “For example, many overseas properties are being marketed here. There are bound to be disappointments and even losses.”

The elderly have the option of voluntarily using these cash proceeds to top-up their CPF RAs or their spouses’ CPF RAs, Mr Khaw said.

ERA Realty key executive officer Eugene Lim noted that while the pool of eligible households is expanded, this is unlikely to cause a dent to the supply of resale flats in the market.

There remains a prevailing mindset among the elderly that the HDB flat is an asset that they wish to bequeath to the next generation, he said.

Mr Khaw told reporters that the scheme is continually reviewed to stay relevant to its targeted beneficiaries as their preferences and life expectancies change over time.

He also conceded that any changes in HDB resale prices could temporarily affect the scheme’s demand, since the value of the lease is calculated based on prevailing market value. But there are bound to be market upturns and downturns within a 30-year lease period, he said, adding that this is a long term scheme.

Source: Business Times – 4 September 2014


Khaw: Lease Buyback scheme may be made more flexible

The government is studying ways to make the Lease Buyback scheme more flexible to suit senior citizens joining the scheme at different ages.

These could include varying the number of years that a senior can retain his HDB flat’s lease when he joins the scheme and sells part of his flat’s lease back to the Housing Development Board (HDB).

Minister for National Development Khaw Boon Wan said this on Sunday, during a post-National Day Rally dialogue for Sembawang GRC, according to reports from The Straits Times and Channel NewsAsia.

Currently, those who join the Lease Buyback scheme retain a fixed portion of 30 years on their flats’ leases, and sell the rest back to HDB for proceeds that are used to top up their Central Provident Fund (CPF) retirement account for annuity payouts.

Details of changes to the scheme are set to be announced in the coming week. These details follow Prime Minister Lee Hsien Loong’s announcement during his National Day Rally last month, that the Lease Buyback scheme will be extended to include four-room flats.

Previously, only owners of three-room or smaller flats were eligible.

That change will mean that 75 per cent of seniors are now eligible for the Lease Buyback scheme, up from 35 per cent previously, Mr Khaw said on Sunday.

But depending on when they join the scheme, some could find the 30-year lease retention period too long or too short. “Many are rightly concerned about outliving the lease,” The Straits Times quoted him as saying. For those who join the scheme when they are older, such as at 80, however, the 30-year lease might be too long.

Source: Business Times – 1 September 2014