June 4, 2007

Bigger resale flats now in hot demand

Buyers with money from collective sales drive up prices as much as $20k above value

By Tan Hui Yee

IT IS becoming a sellers' market in the public housing sector.

Given the private housing property boom, it was just a matter of time before prices of resale Housing Board flats swung upwards.

The recent spate of private estate collective sales has unleashed a group of cash-rich house hunters, many of whom are opting for high-end resale HDB units. These buyers can afford to pay top dollar.

Meanwhile, rising rentals for HDB units - as much as 35 per cent in the past year - mean fewer owners want to sell their homes, while hard-hit tenants are starting to look for flats to buy.

Those selling their flats expect prices to climb further.

For example, many executive flats - which in recent years have not been popular because of their relatively higher prices - are now selling for about $20,000 above their value, say property agencies.

This was almost unheard of as recently as a year ago.

In one deal handled by Propnex, an 18-year-old executive flat in Hougang changed hands last week for $388,000 - $22,000 above its value.

This factor - a flat's prevailing valuation - affects the market because the portion of its selling price above its value has to be paid in cash instead of through a buyer's Central Provident Fund savings or through a home loan.

Also, until recently, the resale market for HDB flats has been relatively sedate compared with that for private property, where long queues have formed for new projects, like during the 1990s boom.

Private property prices rose by 10.2 per cent last year, and 4.6 per cent from January to March.

Meanwhile, prices of resale HDB flats only inched up 1.8 per cent last year and 1.3 per cent in the first quarter.

The senior vice-president of HSR Group, Mr Donald Yeo, told The Straits Times: 'It used to be that four people would respond to each HDB property advertised. Now, it is about 12 to 18 people.'

Mr Albert Lu, managing director of C&H Realty, went as far as to say: 'There is a shortage of HDB flats for sale.'

Immigration officer Muhammad Ridzuan Jaapar sold his three-room flat in Toa Payoh about two months ago for $205,000 - $15,000 above its value - within a day.

He said: 'My wife's parents took about six months to sell their executive flat last year. I was surprised I could sell my flat in one day.'

Another flat owner, Mr Sim Hock Seng, 50, sold his four-room flat in Marine Parade for $355,000 - $50,000 above its value - in April. The hawker bought an executive maisonette in Bedok Reservoir Road for $365,000.

Meanwhile, the heat of the competition has got to agents, with some refusing to 'co-broke', or deal with other agents, because it is now easier to sell flats on their own.

C&H Realty's Mr Lu said: 'For agents serving home buyers, it is difficult now to find a flat to buy. When it is easy to sell a flat, the (sellers') agents do not want to co-broke.'

Under co-broking, if the seller and buyer are represented by different property agents, they pay commissions to their own agents.

For the resale of an HDB flat, a seller typically pays his agent a 2 per cent fee, while a buyer typically pays 1 per cent.

If a housing agent represents both the buyer and seller, he gets to collect commissions from both parties.

Realtors predict that prices will continue to rise for the year, but they caution that not all flats will generate equally keen interest.

While the boom is felt for flats closest to the city centre - like those near Tiong Bahru, Redhill and Queenstown MRT stations, for example - the prices of resale flats in outlying areas or newer towns such as Punggol or Sengkang will continue to face pressure because the HDB is building new flats there.

[email protected]