Moves to cut HDB prices won't hit existing owners

[reporter2]

http://www.straitstimes.com/archive/...wners-20130315

Moves to cut HDB prices won't hit existing owners

The proposals are meant only for new HDB flats, Khaw clarifies

Published on Mar 15, 2013

By Daryl Chin Property Correspondent


PROPOSALS to make new lower-priced Housing Board flats more affordable to first-time buyers will not affect existing home owners, National Development Minister Khaw Boon Wan confirmed yesterday.

He made the clarification to quell concerns that may have arisen after he floated three ideas to help people looking to enter the property market - particularly young couples.

At a community walking event on Sunday, he suggested extending the minimum occupation period before owners can resell their flats, shortening a flat's lease or even reinstating a pre-1971 rule that owners can sell HDB flats only back to the Housing Board.

This last suggestion alarmed some home owners because the reselling of flats on the open market enabled many to earn capital gains and accumulate large nest eggs.

In his blog post, Mr Khaw recounted that a Queenstown resident who had planned to downsize to a newer flat and use the proceeds to fund her retirement had raised concerns to him.

Responding to her distress as well as that of others like her, Mr Khaw said the new restrictions would affect only those going for new flats.

He said that the Government has not forgotten the "interest of the many hundreds of thousands of existing home owners".

He added: "Some plan to rely on their flat to finance retirement needs. Some hope to bequeath their flats to the next generation. Some rely on renting out a room to bring in extra cash proceeds. Their concerns matter to me too."

Existing HDB flat owners breathed a sigh of relief.

University student Serene Choong, 23, who is waiting for her $341,000 four-room in Punggol to be completed, said her main concern was snagging her desired unit.

"Some complain that it's not fair that prices might go down, but we are just happy to have a home," she said.

"To know that it can be profitable down the road is also very welcome news."

Housewife Daphne Wong, 38, said: "I can rest easier, knowing that my flat is still of value to my children and me."

There are about 900,000 Housing Board households.

Of these, 43,000 flats are rented out and another 40,000 owners rent out rooms.

Mr Khaw explained that the Government is looking at a new housing option "which can be a lot cheaper than today's BTO (Build-to-Order) price".

"If we offer such a low-cost housing option, it must come with restrictions to differentiate it from the existing BTO flats," he added, saying this would apply only to the new buyers.

In Parliament last week, he pledged to lower the prices of new flats in non-mature estates to a level roughly equal to four years of median household income of the applicants.

For instance, a four-room flat applicant with a household income of $4,100 a month might see prices drop to $197,000 after housing grants, compared with a price tag of up to $300,000 in the last BTO exercise in January.

ERA Realty key executive officer Eugene Lim said Mr Khaw's comments would calm the property market, although the full implications would be known only when more details emerge.

Mr Lim believes the cheaper properties would be similar to current studio apartments, which are meant for the elderly, sold on 30-year leases and cannot be resold on the open market.

He said: "The difference is that studios are meant for those in their twilight years, while young couples will want asset appreciation in order to get ahead in life.

" This group, who already have affordability issues, might effectively be a social underclass."

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[thomastansb]

If drop 100k, I think PAP just self destruct. Those who bought at 300k 6 months ago, they will never vote for PAP again.

[reporter2]

http://www.businesstimes.com.sg/arch...-khaw-20130315

Published March 15, 2013

Any fresh HDB curbs will affect new buyers only: Khaw

Analysts welcome clarification, but cite problems such new rules could create

By Lee Meixian


[SINGAPORE] National Development Minister Khaw Boon Wan yesterday gave the assurance that any fresh curbs that would be introduced to make public housing more affordable - including disallowing the reselling of HDB flats on the open market - would apply only to new buyers, not existing flat owners.

The clarification came after earlier mention of such possible curbs last week unnerved the market and drove property stocks down, as many buyers of private homes are HDB upgraders. Keppel Land, Wing Tai Holdings and City Developments have fallen 2-3.8 per cent while CapitaLand has lost 4.8 per cent.

Mr Khaw had said in Parliament that with current prices of new flats standing at about five-and- a-half years of home owners' salaries, the government may want to bring this down to four years of salary for flats in non-mature estates.

At a community event on Sunday, he highlighted several possible measures, such as the restoration of the old rule requiring owners to sell flats back only to the Housing Board instead of the open market, shorter leases and longer minimum occupation periods.

The minister made the clarification in his blog, Housing Matters. He said this was in response to a resident of Queenstown, who told him that she was worried that HDB would suspend the reselling of flats on the open market.

He wrote that she had gone to his Meet-the-People session in Sembawang to tell him that she owned a fully-paid-up three-room flat, and had booked a build-to-order (BTO) flat in Bukit Panjang which would be ready only in a few years, by which time she hoped to sell the three- room flat to create a "sizeable" retirement fund.

In his blog post, Mr Khaw wrote that he told her that the "no resale on the open market" proposal was among the suggested curbs to be imposed on possible new housing options that would be cheaper than today's BTO flats.

But such restrictions, he wrote, would apply only to new buyers, and not existing flat owners.

He added that his ministry would not forget the interests of the many hundreds of thousands of present home owners.

"Some plan to rely on their flat to finance retirement needs. Some hope to bequeath their flats to the next generation. Some rely on renting out a room to bring in extra cash proceeds. Their concerns matter to me too."

The clarification was welcomed by analysts, who said it put things in perspective and ensured fairness for prior flat buyers and existing owners.

Still, for those that could be affected, the loss of the option of selling one's flat on the open market amounts to the loss of its status as a tradable asset.

As SLP International head of research Nicholas Mak put it, buying such homes would almost be like "renting from HDB".

He said: "Buyers will no longer view HDB flats as a store of wealth, which is a fundamental shift from now, when people view their homes as an asset."

DWG's senior manager Lee Sze Teck pointed out that two groups of home owners may also emerge from such a situation: those who can benefit from the property market cycle to earn a profit tidy enough to upgrade; and those who find themselves stuck midway up the housing ladder, unable to take part in the same wealth creation because of their restriction- laden homes.

"This is not healthy because of the wealth gap it creates," he said.

Many other questions about the proposed restrictions remain, such as the proportion of upcoming flats which could be affected; the impact of shorter leases on the availability of bank financing; and by how much monthly instalments could rise.

But nothing appears to be cast in stone.

Mr Khaw said he intends to invite flat owners to join in "Our Singapore Conversation" sessions to voice their concerns on housing policies. If flat owners who form the vast majority remain silent, discussion on housing policies may get wrongly skewed."

[oops]

CHEERS TO EXISTING OWNERS!!

[Regulators]

kbw dare not rock the boat too much otherwise pap will lose more votes