Aug HDB resale prices fall 1.1% from July: SRX

[reporter2]

http://www.businesstimes.com.sg/arch...y-srx-20140905

Published September 05, 2014

Aug HDB resale prices fall 1.1% from July: SRX

This is within consultants' 'soft landing' expectations

By Lynette Khoo

[email protected] @LynetteKhooBT


[SINGAPORE] HDB resale prices likely remained on a slide in August, with latest data from the Singapore Real Estate Exchange (SRX) suggesting a 1.1 per cent drop in resale prices from a month ago.

But this is still within what property consultants would term as "a soft landing" engineered by government cooling measures, with a market consensus that HDB resale prices could drop by 5-8 per cent for the whole year.

Resale prices were also down 7.1 per cent from August last year and 8.6 per cent from the peak in April 2013, based on the SRX data.

According to SRX, buyers paid an average of S$3,000 less than the estimated market value for flats. Three and four-room flats were the main drag for the month-on-month fall, as their resale prices fell 2 per cent and 0.9 per cent respectively in August. The larger flats - five-room and executive flats - turned out to be resilient in August, with their resale prices edging up 0.8 per cent and 1.5 per cent respectively.

R'ST Research director Ong Kah Seng, who expects resale prices to fall by up to 7 per cent this year, noted that the eligible pool of buyers looking for smaller- sized flats is shrinking while some buyers find it hard to obtain sufficient loan for the bigger flats due to their heftier price quantums. But there are also buyers who saw the recent slide in prices as a window to snap up the larger units, he said.

The number of resale transactions in August slipped 1.1 per cent over a month to 1,327 flats, which is down 3.3 per cent year-on-year and down 63.6 per cent from the peak of 3,649 in May 2010.

ERA Realty key executive officer Eugene Lim attributed the slight month-on-month fall in resale volume to the Hungry Ghost Festival, which "tends to slow down house buying activities especially for the more superstitious".

"We may see more buyers and sellers returning to the market after the seventh month," he added.

Meanwhile, rental prices and volume stayed relatively flat, with an estimated 1,550 HDB flats rented in August.

Mr Lim said he believes that rents will moderate by 5-10 per cent by year-end, given the curbs on foreign workers and greater competition from more BTO (build-to-order) flats entering the resale market after crossing the minimum occupation period and more private condos being completed.

Also forecasting a 5-8 per cent drop in resale prices for the whole year, Mr Lim said: "The cooling measures are not designed to crash the market, so we see the HDB resale market finding its footing."

[DC33_2008]

It will get worst when more HDB upgraders need to sell or least their hdb flats when they collect their keys for EC/PC.

[august]

It will get worst when more HDB upgraders need to sell or least their hdb flats when they collect their keys for EC/PC.

Why need to sell their hdb flats? Can't hold?

[Yuki]

Why need to sell their hdb flats? Can't hold?

U must sell flat when u go for ec.

[minority]

good let the HDB crash. now that there is lease buy back. let it all crash. since thats what the people want right? everything to be cheap and worthless.

[Amber Woods]

The Lease Buy Back (LBB) scheme works well in a stable property market because the valuation of the flat is taken at the point in time. Hence, it would be "risky" to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly. Worst case, the owner may not even receive any cash from HDB or even negative cash. As such, HDB prices have to be in line with income level going forward for the LBB scheme to work well.

With Singapore's GDP expected to be low as a developed country, I believe the government is orchestrating for a soft landing so that property prices is in line with national income.

The government has been very consistent in its efforts to bring property prices down to sustainable level. The market will take some time to adjust. Sadly, the minority multi-property owners are not going to be happy this time round.

[Arcachon]

Published on 8 Sep 2014
http://bit.ly/1pJTeYc What will the HDB market be like in 2014 and beyond? Is there a cause to be concerned? Are there still opportunities? Is it the right time to buy, sell or hold? Many other questions answered...

[minority]

The Lease Buy Back (LBB) scheme works well in a stable property market because the valuation of the flat is taken at the point in time. Hence, it would be "risky" to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly. Worst case, the owner may not even receive any cash from HDB or even negative cash. As such, HDB prices have to be in line with income level going forward for the LBB scheme to work well.

With Singapore's GDP expected to be low as a developed country, I believe the government is orchestrating for a soft landing so that property prices is in line with national income.

The government has been very consistent in its efforts to bring property prices down to sustainable level. The market will take some time to adjust. Sadly, the minority multi-property owners are not going to be happy this time round.

LBB is to help the cash strap and lower income. its not for everyone. Anyway there are no policies that can 100% please everyone.

[taggy]

The Lease Buy Back (LBB) scheme works well in a stable property market because the valuation of the flat is taken at the point in time. Hence, it would be "risky" to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly. Worst case, the owner may not even receive any cash from HDB or even negative cash. As such, HDB prices have to be in line with income level going forward for the LBB scheme to work well.

With Singapore's GDP expected to be low as a developed country, I believe the government is orchestrating for a soft landing so that property prices is in line with national income.

The government has been very consistent in its efforts to bring property prices down to sustainable level. The market will take some time to adjust. Sadly, the minority multi-property owners are not going to be happy this time round.

LBB is to help the cash strap and lower income. its not for everyone. Anyway there are no policies that can 100% please everyone.

is this true? can anyone confirm?
i cant find this mention in hdb website...
i am under the impression that once the lease sold back to hdb, hdb will took over the risk of valuation decrease as well...
just like in the case if hdb price increase, the flat owner cant demand more $ for the lease that was already sold to hdb....

[chestnut]

is this true? can anyone confirm?
i cant find this mention in hdb website...
i am under the impression that once the lease sold back to hdb, hdb will took over the risk of valuation decrease as well...
just like in the case if hdb price increase, the flat owner cant demand more $ for the lease that was already sold to hdb....

http://www.hdb.gov.sg/fi10/fi10325p....k?OpenDocument

Ministry of National Development (MND) and the Housing & Development Board (HDB) announced the revisions to the Lease Buyback Scheme on 3 Sep 2014. Applications under the new scheme will be accepted from 1 April 2015.

The Enhanced Lease Buyback Scheme (LBS) is an additional monetisation option to help low-income elderly households in 3-room and smaller flats to unlock part of their housing equity while continue living in their homes, and receive a lifelong income stream to supplement their retirement income.

Under the Enhanced LBS, the elderly flat owners sell part of their flat lease to HDB and retain a 30-year lease. Their proceeds from selling part of the flat lease will be used to top up their CPF Retirement Accounts (RAs). Flat owners will use their full CPF RA savings to purchase a CPF LIFE plan to give them a monthly income for life.

Are There Any Restrictions?

During the 30-year lease

The Enhanced LBS is intended for those who wish to age-in-place. Hence, the 30-year lease term is non-transferable in the open market. The flat owner cannot sell the flat in the open market or sublet the whole flat.

Premature Termination of Lease

To terminate the lease prematurely, the flat owner can:

Return the flat to HDB, and
Receive a refund for the residual lease pro-rated on a straight-line basis
The CPF LIFE plan will not be terminated and will continue to provide a lifelong monthly income.


What if I outlive the 30-year Lease?

There may be cases where the flat owner outlives the 30-year lease. Such cases will be dealt with on an individual basis and appropriate housing arrangements will be provided to those flat owners who are not in a position to pay for the lease extension.

No elderly flat owner will be left homeless if he/she outlives the 30-year lease of the LBS flat.

What happens if I pass away within the 30-year lease?

Your spouse or child who is staying in the flat will be given the option of either staying in the flat for the balance of the 30-year lease, or returning the flat to HDB.
If your lease is terminated pre-maturely, HDB will reimburse the residual value of the lease based on straight-line depreciation to your beneficiaries.
The unused portion of your premium*, if any, will be refunded to your CPF accounts when you pass away. The monies will then be distributed to your nominees. If you have not made a nomination, the monies will be distributed to your family members according to intestacy law.


*The unused portion of the premium is the annuity premium less annuity payouts that you have received thus far. For example, if the annuity premium is $50,000 and you have received $250 monthly for a total of 10 months, the unused portion of the premium is $47,500.

[taggy]

http://www.hdb.gov.sg/fi10/fi10325p....k?OpenDocument

Ministry of National Development (MND) and the Housing & Development Board (HDB) announced the revisions to the Lease Buyback Scheme on 3 Sep 2014. Applications under the new scheme will be accepted from 1 April 2015.

The Enhanced Lease Buyback Scheme (LBS) is an additional monetisation option to help low-income elderly households in 3-room and smaller flats to unlock part of their housing equity while continue living in their homes, and receive a lifelong income stream to supplement their retirement income.

Under the Enhanced LBS, the elderly flat owners sell part of their flat lease to HDB and retain a 30-year lease. Their proceeds from selling part of the flat lease will be used to top up their CPF Retirement Accounts (RAs). Flat owners will use their full CPF RA savings to purchase a CPF LIFE plan to give them a monthly income for life.

Are There Any Restrictions?

During the 30-year lease

The Enhanced LBS is intended for those who wish to age-in-place. Hence, the 30-year lease term is non-transferable in the open market. The flat owner cannot sell the flat in the open market or sublet the whole flat.

Premature Termination of Lease

To terminate the lease prematurely, the flat owner can:

Return the flat to HDB, and
Receive a refund for the residual lease pro-rated on a straight-line basis
The CPF LIFE plan will not be terminated and will continue to provide a lifelong monthly income.


What if I outlive the 30-year Lease?

There may be cases where the flat owner outlives the 30-year lease. Such cases will be dealt with on an individual basis and appropriate housing arrangements will be provided to those flat owners who are not in a position to pay for the lease extension.

No elderly flat owner will be left homeless if he/she outlives the 30-year lease of the LBS flat.

What happens if I pass away within the 30-year lease?

Your spouse or child who is staying in the flat will be given the option of either staying in the flat for the balance of the 30-year lease, or returning the flat to HDB.
If your lease is terminated pre-maturely, HDB will reimburse the residual value of the lease based on straight-line depreciation to your beneficiaries.
The unused portion of your premium*, if any, will be refunded to your CPF accounts when you pass away. The monies will then be distributed to your nominees. If you have not made a nomination, the monies will be distributed to your family members according to intestacy law.


*The unused portion of the premium is the annuity premium less annuity payouts that you have received thus far. For example, if the annuity premium is $50,000 and you have received $250 monthly for a total of 10 months, the unused portion of the premium is $47,500.

The Lease Buy Back (LBB) scheme works well in a stable property market because the valuation of the flat is taken at the point in time. Hence, it would be "risky" to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly. Worst case, the owner may not even receive any cash from HDB or even negative cash. As such, HDB prices have to be in line with income level going forward for the LBB scheme to work well.

With Singapore's GDP expected to be low as a developed country, I believe the government is orchestrating for a soft landing so that property prices is in line with national income.

The government has been very consistent in its efforts to bring property prices down to sustainable level. The market will take some time to adjust. Sadly, the minority multi-property owners are not going to be happy this time round.

Thanks Chestnut,
still there is nothing mention about "risky to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly."
it is clear that $ pay out from LBB go into CPF life which will provide monthly payout,
any balance $ from LBB go into hdb owner's pocket.
this $ amount is fixed at point of LBB; any future increase/decrease in the hdb valuation doesnt affect this $ amount.

Amber Woods got her fact wrong lah
in fact i think LBB most suitable for people who think hdb price is going down the drain, cos u get to cash out partially without needing to lost your home

[Amber Woods]

is this true? can anyone confirm?
i cant find this mention in hdb website...
i am under the impression that once the lease sold back to hdb, hdb will took over the risk of valuation decrease as well...
just like in the case if hdb price increase, the flat owner cant demand more $ for the lease that was already sold to hdb....

Mr Khaw explained that the flat is valued by a professional private valuer appointed by the HDB, based on widely accepted industry standards and valuation practice. But how the value is split between the front-end retained lease and the tail-end sold lease is "not a straight line depreciation" due to the time value of money and that property with a shorter outstanding lease depreciates faster than one with a longer lease.

Going strictly by industry valuation standards, valuers are likely to value the tail-end of the lease much lower than the lease retained by the owner, Mr Khaw said. This is why the HDB disallows subletting of the entire flat or resale under the LBS, he added. "When valuers value the front-end of the lease to be retained, they take that into account and discount it, so instead of the 75-25 split, it then ends up roughly 60-40."

The significant improvement of value of the tail-end lease sold to the HDB results in higher cash proceeds for the owners - making the LBS "a lot more attractive and meaningful to the owners", Mr Khaw said.

He noted that the property cycle can affect all monetisation options, whether it is lease buyback, right-sizing or disposing the flat.

The key is to make sure that there is proper counselling so that the flat owners are fully aware of the options and do not rush into making a decision, he said.

From Mr Khaw's comments, it appears that it would make more sense to execute LBS at the peak of the property cycle to obtain the highest valuation. If the peak is yet to materialise, you may end up losing even more with LBS expecially if it is execute at the wrong phase of the property cycle.

[star]

Thanks Chestnut,
still there is nothing mention about "risky to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly."
it is clear that $ pay out from LBB go into CPF life which will provide monthly payout,
any balance $ from LBB go into hdb owner's pocket.
this $ amount is fixed at point of LBB; any future increase/decrease in the hdb valuation doesnt affect this $ amount.

Amber Woods got her fact wrong lah
in fact i think LBB most suitable for people who think hdb price is going down the drain, cos u get to cash out partially without needing to lost your home

Bro some people r not getting the fact right. They Just anyhow bash govt when even they got the slightest chance.

[Amber Woods]

Base on the limited information, it does appear that it makes more sense to execute the LBS during the peak so that you get a higher valuation for your flat and hence more money for the remaining lease. On the other hand, if your flat is valued low during the down cycle, your remaining lease will be worth much less.

[Sam88]

Thanks Chestnut,
still there is nothing mention about "risky to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly."
it is clear that $ pay out from LBB go into CPF life which will provide monthly payout,
any balance $ from LBB go into hdb owner's pocket.
this $ amount is fixed at point of LBB; any future increase/decrease in the hdb valuation doesnt affect this $ amount.

Amber Woods got her fact wrong lah
in fact i think LBB most suitable for people who think hdb price is going down the drain, cos u get to cash out partially without needing to lost your home

Read this :

Under the Enhanced LBS, the elderly flat owners sell part of their flat lease to HDB and retain a 30-year lease

What it means is : Owner sell the flat back to hdb and buys a 30 year lease from hdb.

If owner dies before the 30 year expiration, he gets pro-rated balance he can give to the family or the family continues to stay in the flat.

It has nothing to do with paying back money should hdb price fall.

[chestnut]

duplicate

[chestnut]

http://en.wikipedia.org/wiki/Lease_Buyback_Scheme

http://www.straitstimes.com/news/sin...cheme-20140818

[chestnut]

Thanks Chestnut,
still there is nothing mention about "risky to perform the LBB during the peak. If prices should fall, the value of the flat will also fall. This will affect the amount the owner will receive monthly."
it is clear that $ pay out from LBB go into CPF life which will provide monthly payout,
any balance $ from LBB go into hdb owner's pocket.
this $ amount is fixed at point of LBB; any future increase/decrease in the hdb valuation doesnt affect this $ amount.

Amber Woods got her fact wrong lah
in fact i think LBB most suitable for people who think hdb price is going down the drain, cos u get to cash out partially without needing to lost your home

Taggy, your understanding is correct. There is no risk regardless of price goes up or down.

At that point, when the person needs money, it is good to monetise the flat and at the same time get annuity from cpf life and also ability to rent out a room.

At least there is an option.

[Amber Woods]

Taggy, your understanding is correct. There is no risk regardless of price goes up or down.

At that point, when the person needs money, it is good to monetise the flat and at the same time get annuity from cpf life and also ability to rent out a room.

At least there is an option.

Agreed that there is no risk regardless of price goes up or down. I made the mistake thinking the LBS is similar to the earlier Reverse Mortgage scheme with NTUC Income. However, it does makes a difference if one will to execute the LBS during the peak when valuation is higher. This will mean more money for the remaining lease.

[august]

Agreed that there is no risk regardless of price goes up or down. I made the mistake thinking the LBS is similar to the earlier Reverse Mortgage scheme with NTUC Income. However, it does makes a difference if one will to execute the LBS during the peak when valuation is higher. This will mean more money for the remaining lease.

LOL there is still a risk. It lies subsequently in the CPF life payouts as they are not fixed or guaranteed. Govt not stupid u know.