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12-09-14, 21:48
http://www.straitstimes.com/archive/saturday/premium/money/story/return-seller-20140906
Return to seller
Exec condos form 30% of units given up in first 7 months of this year
Published on Sep 6, 2014 1:05 AM
By Cheryl Ong
BUYERS of executive condominiums (ECs) are backing out of their purchases more than buyers of private properties, new data analysis shows.
Only a handful of ECs are on the market, compared with scores of private condos.
But units from just eight EC projects made up about 30 per cent of the 277 units returned to developers in the first seven months of the year.
The figures are based on an analysis of monthly data from property portal Square Foot Research.
ECs are a hybrid of public and private housing, sold with Housing Board restrictions.
At Skypark Residences, an EC in Sembawang, for instance, 22 units were returned - the highest number among the projects.
Forestville in Woodlands was next with 18. In Punggol, 14 units were given up at Ecopolitan while Waterwoods had 12 units returned. The Sea Horizon EC project in Pasir Ris had 10 units returned.
Consultants suggested that one reason could be that prices of ECs have risen to record levels, and that a lower mortgage servicing ratio (MSR) introduced last year limited the monthly housing payments at 30 per cent of the buyer's gross monthly income.
"The substantial (number of) units returned could be due to impulse buying, and buyers finding that they cannot secure a sufficient loan under the new MSR cap, or that the prices worked out to be in excess of their affordability," said Mr Ong Kah Seng, director of R'ST Research.
Weak market sentiment could also mean buyers expect property prices to correct further, and some might have decided to give up their units for other opportunities, said Mr Ong.
Another possibility is that some buyers did not meet the eligibility criteria set by HDB. For instance, EC buyers cannot have a combined gross monthly income of more than $12,000, and must have lived in their HDB flat for at least five years, if they are not first-time buyers.
But some returns could simply be because of cancelled marriage plans, since buyers must form a family unit to buy an EC unit, said Mr Nicholas Mak, research head at SLP International.
The penalty for returning a unit to developers who bought EC land after Dec 9 is 5 per cent of the property's price, after the sales agreement has been exercised. For all other EC projects, the penalty is 20 per cent of the unit's price tag. If the sales agreement has not been exercised, the penalty is typically about 1.25 per cent of the purchase price.
However, the number of EC units returned to developers is not alarming against the 3,337 EC units launched last year. No EC project was launched in the first seven months of the year.
Mr Steven Tan, managing director of OrangeTee, said the demand for ECs is still high, as they are much more affordable than private homes. "As the number of sales transactions increases, the likelihood of units being returned also increases," he said.
[email protected]
Return to seller
Exec condos form 30% of units given up in first 7 months of this year
Published on Sep 6, 2014 1:05 AM
By Cheryl Ong
BUYERS of executive condominiums (ECs) are backing out of their purchases more than buyers of private properties, new data analysis shows.
Only a handful of ECs are on the market, compared with scores of private condos.
But units from just eight EC projects made up about 30 per cent of the 277 units returned to developers in the first seven months of the year.
The figures are based on an analysis of monthly data from property portal Square Foot Research.
ECs are a hybrid of public and private housing, sold with Housing Board restrictions.
At Skypark Residences, an EC in Sembawang, for instance, 22 units were returned - the highest number among the projects.
Forestville in Woodlands was next with 18. In Punggol, 14 units were given up at Ecopolitan while Waterwoods had 12 units returned. The Sea Horizon EC project in Pasir Ris had 10 units returned.
Consultants suggested that one reason could be that prices of ECs have risen to record levels, and that a lower mortgage servicing ratio (MSR) introduced last year limited the monthly housing payments at 30 per cent of the buyer's gross monthly income.
"The substantial (number of) units returned could be due to impulse buying, and buyers finding that they cannot secure a sufficient loan under the new MSR cap, or that the prices worked out to be in excess of their affordability," said Mr Ong Kah Seng, director of R'ST Research.
Weak market sentiment could also mean buyers expect property prices to correct further, and some might have decided to give up their units for other opportunities, said Mr Ong.
Another possibility is that some buyers did not meet the eligibility criteria set by HDB. For instance, EC buyers cannot have a combined gross monthly income of more than $12,000, and must have lived in their HDB flat for at least five years, if they are not first-time buyers.
But some returns could simply be because of cancelled marriage plans, since buyers must form a family unit to buy an EC unit, said Mr Nicholas Mak, research head at SLP International.
The penalty for returning a unit to developers who bought EC land after Dec 9 is 5 per cent of the property's price, after the sales agreement has been exercised. For all other EC projects, the penalty is 20 per cent of the unit's price tag. If the sales agreement has not been exercised, the penalty is typically about 1.25 per cent of the purchase price.
However, the number of EC units returned to developers is not alarming against the 3,337 EC units launched last year. No EC project was launched in the first seven months of the year.
Mr Steven Tan, managing director of OrangeTee, said the demand for ECs is still high, as they are much more affordable than private homes. "As the number of sales transactions increases, the likelihood of units being returned also increases," he said.
[email protected]