Govt to drive down prices of BTO flats

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http://www.businesstimes.com.sg/arch...ats-20130309-0

Published March 09, 2013

Govt to drive down prices of BTO flats

Public housing policy to be relooked as Khaw announces series of new measures

By Mindy Tan


SINGAPORE will relook its public housing policies and try to bring down the prices of built-to-order (BTO) flats.

While the housing policy had enabled the vast majority of Singaporeans to own homes, it needed to be reviewed in the light of significant demographic and economic changes, said Minister for National Development Khaw Boon Wan yesterday.

The primary mission of the Housing & Development Board (HDB) remained offering affordable homes. To that end, "we can now pause and see what else we can do to bring BTO (built-to-order) prices in non-mature estates to say, around four years of salary as it was before the current property cycle started," said Mr Khaw.

This, he said, will be achieved partly through cooling measures to nudge the property market down and partly by seeing if an alternative housing option can be designed.

The HDB will be ramping up flat supply; 25,000 new flats will be launched this year, up from the earlier announced 23,000 flats.

In the more immediate future, first-timer singles aged 35 and above will be able to buy new two-room flats directly from the HDB with effect from the July BTO exercise; the first BTO exercise for singles will be in Sengkang.

Providing broad parameters, Mr Khaw said singles who earn up to $5,000 per month will have an option of 35-sq-m and 45-sq-m flats in non-mature estates.

"A couple of other important details are still being finalised," qualified Mr Khaw. "For example, how much should we subsidise the flats, compared to married couples? What should the relative priority be between singles and married couples applying for these flats?"

Given that singles account for some 15 per cent of resale flat transactions, this could dampen resale demand, putting downward pressure on prices that have currently reached a peak, said ERA Realty Network's key executive officer Eugene Lim.

"We expect many of them (singles) to buy these new flats as these flats will have to be priced such that a single person earning $5,000 or less per month will be able to afford them. By buying directly from the HDB, they do not need to pay COV (cash-over-valuation) as in the resale market," said Mr Lim.

R'ST director Ong Kah Seng disagreed, saying that the announcement could result in renewed buying interest in the HDB resale market (particularly for three-room flats and larger) as well as the shoebox sector.

"Since H2 2012, the 'singles' housing market is partially awaiting details of the government's review (with regard to) whether singles can buy BTO flats, and if so, what is the eligibility criteria," said Mr Ong.

With the eligibility criteria made known, singles who do not qualify to purchase a BTO flat, or those who qualify but find a two-room flat too small for their needs, will resume their hunt for a suitable small-sized private apartment or larger HDB resale flat, said Mr Ong.

While the government is ready to tackle the issue of housing for singles, given that the "immediate phase of fire-fighting for first-timers is over", there are still other "hotspots" to tackle, said Mr Khaw.

To that end, help will continue to be dished out to first-timer married couples; specifically, the Parenthood Priority Scheme will be extended to include pregnant mothers with effect from the May BTO launch.

The scheme, which currently sets aside a fixed quota of 30 per cent and 50 per cent of flat supply under BTO and sales of balance flats (SBF) exercises respectively for first-timer married couples with children, will be further extended to cover those already married but without children. Mr Khaw said he hopes to implement this next year, once the backlog of pregnant mothers is cleared.

In addition, the Parenthood Provisional Housing Scheme, which provides an additional housing option to first-timer married couples with a child who need to rent while awaiting completion of their new HDB flats, will be extended to married HDB first-timers without children.

Specific "vulnerable" pockets within the segment of second-timer applicants too will receive help. From the May BTO launch, second-timers who need to downgrade will find it easier, with the quota for two-room and three-room flats in non-mature estates doubled from 15 per cent to 30 per cent.

Of the 30 per cent quota, 5 per cent will be reserved for divorcees or those who have been widowed who have children below 16 years. "This will almost guarantee their ability to select a two-room flat, and significantly increase the chances of those who apply for a three-room flat," said Mr Khaw.

Separately, divorcees who face debarment from subsidised flats will have a shortened debarment period, from five years to three years.

To further support right-sizing for seniors, more studio apartments will be built for seniors. In addition, a new Studio Apartment Priority Scheme (SAPS) will be introduced, wherein half of the supply of available studio apartments will be set aside for seniors who apply for one near their current flat or near where their children live. This scheme, which will be implemented from the May BTO exercise, will replace both the Ageing-in-Place Priority Scheme, and the Married Child Priority Scheme.

Separately, two related measures on the subletting of HDB flats to non-citizen sub-tenants were announced, with the aim of helping prevent the growth of foreigner enclaves in some HDB blocks.

"While we sort out the implementation details, HDB will cap approvals for all new and renewal of HDB tenancy agreements, involving non-citizens, to one-and-a-half years," said Mr Khaw. "These changes will not apply to Malaysian tenants as they face less integration challenges."

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http://www.straitstimes.com/archive/...eaper-20130309

New HDB flats to become cheaper

Khaw vows to make them nearly 30% cheaper to keep homes affordable

Published on Mar 09, 2013

By Rachel Chang


THE prices of new flats will become almost 30 per cent cheaper to keep the Singapore dream of home ownership alive, National Development Minister Khaw Boon Wan pledged yesterday.

The ambitious goal makes clear the Government's commitment to "restoring and maintaining" the affordability of flats for first-time home buyers, he told Parliament.

Hinting at a fundamental redesign of public housing, Mr Khaw said that he wants new flat prices in non-mature estates at around "four years of salary" - what they were before the property bull run of the last six years began.

That is, new homes in non-mature estates will be priced at four times the annual median income of flat applicants.

This would mean a sharp drop from current prices, which are about 5.5 years of salary.

Referring to young first-timers, the minister declared that "their Singapore dream of owning their own homes, like their parents', is safe".

He already broke with HDB convention in 2011 by delinking Build-to-Order (BTO) prices from the rising resale market when he took over the housing portfolio.

This meant that while the resale market has risen 12.5 per cent since, prices of new flats launched have stayed stable. Since 2007, when the current property upswing began, the resale price index has spiked 95.8 per cent.

Yesterday, Mr Khaw made clear that he would be going much further than price stabilisation.

Bringing down BTO prices in non-mature estates will be partly through market cooling measures, and "partly by seeing if an alternative housing option can be designed", he said.

He did not elaborate, but analysts said the remark portended major policy changes - perhaps shorter flat leases or different classes of new flats.

In a budget debate speech chock-full of policy announcements, Mr Khaw answered calls from MPs to meet the housing needs of groups that have been on the sidelines in the first half of his term. He had something for everyone, from singles and divorcees to second-timers and young couples waiting for their new flats to be built.

Fulfilling a promise Prime Minister Lee Hsien Loong made in last year's National Day Rally, he announced that singles aged 35 years old and above will be able to buy new two-room flats from July.

The first batch will likely be in Sengkang, but only those earning $5,000 and less a month will be eligible, he said, as they face the most financial difficulty in getting housing.

Lower-income families looking to buy their second new flat will now get double the chance: 30 per cent of two- and three-room flats in non-mature estates will now be for second-timers, up from 15 per cent. Of this 30 per cent, 5 per cent will be reserved for divorcees or the widowed who have young children.

The new scheme for young families waiting for their new flats to rent subsidised flats from the HDB in the interim will also now be extended to young, childless couples. SLP head of research Nicholas Mak said that Mr Khaw's plan to slash BTO prices would reverberate through the entire property market. Demand may drain from the resale market to the new, cheaper flats.

But with construction costs rising and curbs on foreign workers, he feared the Government might fail to meet its promised supply.

Teacher Lim Yan Han, 24, welcomed Mr Khaw's message but said the proof of the pudding was in the eating. She and her engineer boyfriend have failed in four ballots for new flats, three in mature estates, and one in non-mature. "It is already so competitive. I'm worried that lower prices will mean more people competing for flats."

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