July 22, 2007

Young couples hit by hot flat resale market

Young buyers with not much savings find it tough going with sellers asking for up to $100k cash in popular areas

By Nur Dianah Suhaimi

WAITING a year to purchase a five-room flat in Bukit Merah has cost marketing executive Zubaidah Salim $118,000.

The 25-year-old and her software engineer fiance had put off buying a flat there last year. Since then, they have watched the average price of a five-room Housing Board resale flat rise from $349,000 to $467,000.

Said Miss Zubaidah: 'We feel like kicking ourselves for not buying a flat last year. Resale prices are so high now that I don't think we're able to afford a five-room flat any more.'

Refusing to budge from their $400,000 budget, the couple have decided to wait for property prices to dip and stay with their parents for the time being.

The red hot HDB resale market has been particularly tough on newlyweds who are scouting around for their first matrimonial flat, said property agents.

Most are in their 20s, have worked no more than five years, and do not have much in their Central Provident Fund (CPF).

At a time when home-sellers are asking for as much as $100,000 cash-over-valuation, young buyers find themselves edged out of the resale market, especially in the popular central areas like Queenstown, Bukit Merah and Tiong Bahru.

HDB figures released last week showed that 70 per cent of resale flats sold from April to last month were above valuation. The average cash paid over the valuation price was $10,000.

In the central areas, buyers were paying an average of $20,900 over valuation.

Said DTZ agent Vincent Tung: 'Young couples don't have that much cash or CPF funds. Unlike other buyers, they don't have the option of upping their budget.'

As a result, many have no choice but to buy a flat from HDB or stay with their parents while waiting for HDB resale prices to dip.

Freelance designer Diana Ho, 30, knows what it is like to miss out on a good deal.

Last year, she and her husband were contemplating buying a HDB maisonette in Lengkong Tiga, Kembangan. Thinking the $410,000 tag was too high, they decided to wait for the price to fall. It went up by $60,000 instead.

Said Ms Ho, who is now staying with her parents in Tampines: 'We might just buy a flat from HDB now since it's cheaper. But this means our flat will be in outlying areas like Sengkang.'

Realtor ERA's division director S. Abdullah Hamid is even advising his young clients against buying a resale flat now.

'If you don't add to demand, prices will soon come down,' he said.

Many young couples see buying from HDB as their only option for now.

Freelance writer Ryan Lim, 30, and his sales executive wife want a flat in Bukit Merah but are avoiding resale flats even though they have a healthy $400,000 budget.

Said Mr Lim: 'We might make a loss if we try to upgrade or sell the flat in the future when prices are not so high.'

In the meantime, they are living with his parents at their four-room flat in Bukit Batok.

Teacher Rosvina Hamzah and her husband recently bought a five-room Bukit Merah flat for just $362,000 from HDB.

Said the 28-year-old: 'Buying a resale flat was our first option. But buying from HDB has proven to be a much better deal.'

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