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Thread: Changes to HDB valuation: Short term pain for long term gains

  1. #1
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    Default Changes to HDB valuation: Short term pain for long term gains

    Buyers and sellers of HDB flats will now undergo a different process when settling on a price
    ST701 Editorial Team - March 12, 2014
    By: Chew Chang Hui

    http://www.stproperty.sg/articles-pr...gains/a/156671

    Buyers and sellers of HDB flats will now undergo a different process when settling on a price, after announcements made by Minister Khaw Boon Wan on 10 March 2014. Instead of first getting an evaluation from HDB before negotiating how much should be paid over, or under, valuation, prices must now be agreed upon first and an Option-to-Purchase (OTP) ­– usually 1% of the asking price – granted, before buyers can request a valuation. The valuation will no longer serve as a price negotiation factor, but rather, the basis of loan evaluations from financial institutions.


    Such a move has the potential to moderate price growth or drops in the property market. The previous focus on cash-over or –under valuation meant that in an upmarket, prices would accelerate upwards rapidly, leading to flats being sold for north of a million dollars. Likewise, in a downmarket, such as after cooling measures were introduced and supply ramped up, prices fell rapidly and we went from talking about cash-over-valuation to cash-under-valuation in the space of about nine months. With this new process, prices will be based even more closely on past transacted prices, instead of one-upping (or “downing”) the previous prices. Buyers would also feel increased pressure to offer lower prices, because if the subsequent evaluation does not meet expectations, the buyer might not be able to get an expected loan amount from the bank and might end up not exercising their options and forfeiting deposits. As a precautionary measure, buyers should get in-principle approval for their loans before offering a price for the property they intend to buy.


    Ultimately, while such a move might cause some short term pain to buyers, sellers and agents, a more stable HDB market is key to making homes more affordable for Singaporeans. This will also enforce the government’s stance that HDB housing is not a source of investment, but rather, a means to put a roof over one’s head.


    What can buyers and sellers do to determine fair transaction values?


    To help buyers and sellers ascertain fair transaction values, use STProperty’s data analytics arm Singapore Property Watch to check the last transacted prices for the block or HDB estate they are buying or selling. By providing insights on previous transaction prices in various HDB estates and neighbourhoods, buyers will reduce the chance of over-offering and sellers will also mitigate the risk of under-pricing their HDB apartments.

  2. #2
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    Before 10 Mar 2014.

    5 room 16 to 20 HDB valuation SGD 640,000 for 126 sqm on 28 Feb 2014, asking SGD 690,000
    Lease Start Date : 01 Jul 1997
    Lease Duration : 99 years
    Remaining Lease : 82 years (as at date of enquiry)

    Geylang 33 11 to 15 137.00 Model A 1996 $680,000.00 Dec 2013
    Geylang 33 01 to 05 137.00 Model A 1996 $657,000.00 May 2013

    Blk 33 Balam Rd S(370033)
    Lease Start Date : 01 Jun 1996
    Lease Duration : 99 years
    Remaining Lease : 81 years (as at date of enquiry)

    After 10 Mar 2014.

    same 5 room HDB asking for SGD 760,000 Fire sale, Singapore sale.

    28 Cassia Cres 16 to 20 120.00 Improved 1998 $785,000.00 Mar 2014
    Blk 28 Cassia Cres S(391028)
    Lease Start Date : 01 Jun 1998
    Lease Duration : 99 years
    Remaining Lease : 83 years (as at date of enquiry)

    123 Geylang East Ctrl 01 to 05 120.00 Improved 1982 $650,000.00 Mar 2014
    Blk 123 Geylang East Ctrl S(380123)
    Lease Start Date : 01 May 1982
    Lease Duration : 99 years
    Remaining Lease : 67 years (as at date of enquiry)

    330 Ubi Ave 1 06 to 10 122.00 Improved 1985 $490,000.00 Mar 2014
    Last edited by Arcachon; 18-03-14 at 02:44.

  3. #3
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    Default HLE pass go ahead and buy.

    I draft you a simple scenario, my another pal who happens to got married early and invited for a walkin selection at bukit panjang in early 2000s paid about 150K for his high floor 4 room new hdb.

    Another friend who was the same age got hitched in 2008 went for BTO ballot and got his 4 room mid floor in punggol at 300K, both guys were drawing same salaries as working in same company almost same post. First friend only opt for 10 year repayment scheme while the second pal had to settle for 25 years.

    I just don't think it is fair to peg BTO prices to resale and hike them to twice the prices in just in a span of less than a decade.


    http://forums.hardwarezone.com.sg/ho...4226629-4.html

  4. #4
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    Default Can see why COV need to remove. Watch the next BTO Balanced Flat

    http://esales.hdb.gov.sg/hdbvsf/eampu11p.nsf/0/13NOVSBF_page_1113/$file/about0_static.htm

    Nov 2013 BTO

    Block 2A Street Upp Boon Keng Rd
    Lease Commencement Date 01 Dec 2006
    #04-700 $645,200 110 Sqm

    Resale

    Blk 2A Upp Boon Keng Rd S(381002)
    Lease Start Date : 01 Dec 2006
    Lease Duration : 99 years
    Remaining Lease : 91 years (as at date of enquiry)

    5R Improved 26 to 30 110 2006 $888,000 Nov 2013

    Nov 2013 BTO
    Block 149 Street Bishan St 11
    Lease Commencement Date 01 Jan 1987
    #03-07* $549,000 122 Sqm

    Resale

    Blk 149 Bishan St 11 S(570149)
    Lease Start Date : 01 Jan 1987
    Lease Duration : 99 years
    Remaining Lease : 71 years (as at date of enquiry)

    164 Bishan St 13 01 to 05 121 Improved 1988 $693,000 Mar 2014
    135 Bishan St 12 06 to 10 121 Improved 1987 $710,000 Dec 2013
    158 Bishan St 13 16 to 20 121 Improved 1988 $750,000 Nov 2013
    164 Bishan St 13 06 to 10 121 Improved 1988 $730,000 Nov 2013
    Last edited by Arcachon; 18-03-14 at 03:16.

  5. #5
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    Why did we pay the COV? which I did when I bought my HDB. Because, paying the COV allowed me to buy the flat I want during that time. I could have insisted in paying less, but I will not be able to get the flat. During that time (2010), it was a good decision as both rentals and HDB prices shot up afterwards. As of this time, it is still a good decision versus renting. I believe COV more or less reflects the true market value rather than the official valuation which lags the market.

    http://forum.singaporeexpats.com/sutra680399.html


    The Valuation of a HDB flat is determined by the HDB itself. They are after all the ultimate owners of the flat - 'buyers' are merely paying a sum of money to 'possess' the flat for a fixed period of time ie the length of the lease.

    So, if the HDB determines the valuation of the flat to be $215k for example, that valuation is the factor that will determine the maximum mortgage you can take out, and how much of your CPF you can use in the purchase etc.

    The COV really comes into play when there are a number of purchasers keen to buy the flat. This could be for a variety of reasons over and above the the calculations the HDB used to determine the valuation. Things like proximity to parents, favourite schools, feng shui etc.

    The government has always recommended that people DON'T pay COV but greed, panic buying and sheer kiasuism will have its way.

    Effectively you have a bidding war and, if the flat is keenly contested for, the 'owner' can determine for themselves how much extra money they want over and above the official HDB valuation. This money has to be in cash. Hence the 'cash' in Cash Over Valuation.

  6. #6
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    Quote Originally Posted by Arcachon View Post
    http://esales.hdb.gov.sg/hdbvsf/eampu11p.nsf/0/13NOVSBF_page_1113/$file/about0_static.htm

    Nov 2013 BTO

    Block 2A Street Upp Boon Keng Rd
    Lease Commencement Date 01 Dec 2006
    #04-700 $645,200 110 Sqm

    Resale

    Blk 2A Upp Boon Keng Rd S(381002)
    Lease Start Date : 01 Dec 2006
    Lease Duration : 99 years
    Remaining Lease : 91 years (as at date of enquiry)

    5R Improved 26 to 30 110 2006 $888,000 Nov 2013

    Nov 2013 BTO
    Block 149 Street Bishan St 11
    Lease Commencement Date 01 Jan 1987
    #03-07* $549,000 122 Sqm

    Resale

    Blk 149 Bishan St 11 S(570149)
    Lease Start Date : 01 Jan 1987
    Lease Duration : 99 years
    Remaining Lease : 71 years (as at date of enquiry)

    164 Bishan St 13 01 to 05 121 Improved 1988 $693,000 Mar 2014
    135 Bishan St 12 06 to 10 121 Improved 1987 $710,000 Dec 2013
    158 Bishan St 13 16 to 20 121 Improved 1988 $750,000 Nov 2013
    164 Bishan St 13 06 to 10 121 Improved 1988 $730,000 Nov 2013
    There is no policy that HDB comes out with that is permanent...so this policy will also only last for a limited time to serve a limited purpose after which it will be revamped again. In fact, HDB only endorsed the COV, after numerous futile attempts to kill it in the earlier years....so we are back in a full circle today.

    Now we have a 'plucky' National Development Minister who is gloating in his success in having tamed the out of control property market. Property investment in Singapore is no longer a game of reading the future economic potential of the property, but one where you are trying to read the future 'cooling measures' which is going to be announced from MND.

    Herewith are two additional areas where Mr Khaw has voiced his dissatisfaction, but yet to announce any measures yet:

    1) How to bring down the BTO price to 4x the mean income of singaporeans from the current 5.5x.
    2) The subsidy currently being offered to someone who is purchasing an EC is larger than the subsidy being offered to someone who is purchasing a BTO 3 room.

    But given what we know about Mr Khaw over the last 3 years, we can continue to expect more 'tinkling' with the rules for the next 2 years.

  7. #7
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    Quote Originally Posted by rook View Post
    There is no policy that HDB comes out with that is permanent...so this policy will also only last for a limited time to serve a limited purpose after which it will be revamped again. In fact, HDB only endorsed the COV, after numerous futile attempts to kill it in the earlier years....so we are back in a full circle today.
    1) How to bring down the BTO price to 4x the mean income of singaporeans from the current 5.5x.

    a. de-link BTO TO RESALE. (90% happy)
    b. made valuation close to market value. (90% happy)
    c. made bigger unit pay more psm. (90% happy)
    d. build smaller unit. (90% happy)

    2) The subsidy currently being offered to someone who is purchasing an EC is larger than the subsidy being offered to someone who is purchasing a BTO 3 room.

    Payment of Resale Levy

    Second-timers who apply for new EC projects where the land sale is launched on or after 9 Dec 2013, including those where tenders were launched earlier but have not closed by 9 Dec 2013, i.e. Westwood Avenue, Canberra Drive and Anchorvale Crescent, will have to pay a resale levy.

    However, second-timers are not required to pay the resale levy if they apply to buy EC units in projects that were launched before 9 Dec 2013. More information on the tender launch dates for EC land sales can be found in the Residential Development List > Executive Condominium (EC).

    http://www.hdb.gov.sg/fi10/fi10321p....C?OpenDocument

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