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Thread: The great public housing debate

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    Default The great public housing debate

    http://www.straitstimes.com/Insight/...ry_443206.html

    October 17, 2009 Saturday

    The great public housing debate

    Insight examines the six most hotly debated issues among house-hunters today

    By Tan Hui Yee, Correspondent


    THE financial gloom has barely lifted, and economic uncertainties still cloud the horizon, and yet prices of resale HDB flats have hit an all-time high.

    Home-seekers priced out of resale flats have jammed queues for new flats, prompting the Housing Board to ramp up its supply of new flats for the coming months.

    National Development Minister Mah Bow Tan has assured the public that there are enough affordable flats for everyone, but stressed that home-seekers have to manage their expectations about getting a home in a prime location.

    The voices of discontent, however, refuse to go away. Critics have accused the HDB of profiting from the sale of flats and blamed the growing number of permanent residents for pushing up home prices.

    Just how valid are these views? Insight scrutinises the statistics and asks the experts to weigh in on six of the most common complaints.

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    http://www.straitstimes.com/Insight/...ry_443212.html

    October 17, 2009 Saturday

    Are permanent residents driving up resale flat prices?


    IT IS easy to pin the blame on new migrants, given the news that Singapore let in a good 55,000 more permanent residents (PRs) in the year leading up to June. This means that the number of PRs grew by 11.5 per cent, the biggest jump in at least six years.

    As a PR cannot buy a new flat directly from the HDB, his cheapest option is a resale flat. Typically, PRs pick up three- to four-room flats before upgrading to bigger homes once they become fully fledged citizens.

    Major property agency ERA did not allay suspicions of the PR link to rising prices when it revealed last month that PRs made up 40 per cent of buyers in its resale flat deals. Three years ago, they accounted for just 20 per cent of its buyers.

    Since ERA-only deals account for about 30 per cent of the HDB resale market, many home-seekers are quick to conclude that PRs are to be blamed.

    But HDB statistics show that PRs bought only about 20 per cent of resale flats this year. That proportion has stayed roughly constant over the past three years.

    The board stresses that price increases cannot be attributed to any single cause.

    It tells Insight: 'Prices of resale flats are influenced by various factors, such as the pace of economic growth and market sentiments.'

    And ERA Asia Pacific's associate director Eugene Lim is quick to concede that his company's figures do not represent the national average.

    He says: 'One reason for ERA's higher-than-average figure is that we are not a local brand, so PRs may have been more inclined to deal with an international company.'

    The chief executive of property agency PropNex, Mr Mohamed Ismail, pleads for some empathy for PRs. Only about 10 per cent of resale deals registered with his agency involved PR buyers in the July to September period.

    He says: 'While PRs do create a demand for resale flats, it makes no sense for foreigners who intend to live here to rent a flat, given the high rental costs.'

    The verdict? The PR effect on the price of resale flats may not be that strong, considering that they buy only one in five of the units sold.
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    http://www.straitstimes.com/Insight/...ry_443211.html

    October 17, 2009 Saturday

    Are investors pushing up prices of resale flats?


    WITH the relaxation of Housing Board restrictions over the years, it has become easier for a savvy Singaporean to make a relatively quick buck from buying a flat.

    Since 2007, an owner need live in his flat for only three years before he can rent it out, if the flat was bought without a housing grant or subsidy.

    For someone who enjoyed a subsidy or a grant, it is five years.

    It is therefore no surprise to hear of people with investment acumen snapping up flats even if they already own private property, with an eye on the potential rent they can earn.

    It is no small sum. Three-room flats in Toa Payoh fetched a median rent of $1,500 a month in the April to June period.

    Rising resale prices could also mean that some buyers are taking a bet of another sort - rushing for flats in prime locations in the hope of getting a windfall when they sell them after the minimum occupation period.

    Disgruntled house-hunters have asked if private property owners should be allowed to buy resale flats at all, given that the resale market is where first-time home-seekers head to if they cannot wait out the three years needed for the HDB to build subsidised flats.

    But just how much of an impact do these investment-driven buyers have on the market?

    When Insight asked the HDB what the proportion of private property owners among flat buyers was, it replied that 'exact figures are not readily available', but that the proportion was 'low'.

    Meanwhile, there are no ready statistics on the number of flat buyers who sell off their properties immediately after the mandated period.

    The HDB carries out periodic inspections to ensure flats are occupied, but policing is admittedly difficult. About 23,000 flats are now rented out legally. The number of recalcitrant owners who rented their flats illegally has dropped over the past three years, from 62 in 2007 to 17 from January to August this year.

    As for flat owners who do not occupy their flats, the HDB has taken action against only one household since 2007. The board is in the process of acquiring it from the offending owners.

    Property agency chiefs do not think investors hold much sway over the HDB resale market.

    A private property owner who buys a resale flat would have to change his home address to that of the flat for at least three years. PropNex's chief executive Mohamed Ismail doubts most private property owners want that hassle.

    In fact, given the climb in resale prices, investors are probably staying away, says ERA Asia-Pacific's associate director Eugene Lim.

    He tells Insight: 'Buying at higher prices means lowering the rate of rental return. Most savvy investors will want to buy low and rent high to maximise returns.'

    Economist Liu Yunhua from Nanyang Technological University feels that home-seekers should not begrudge the small minority of private property owners who buy resale flats for investment. After all, they are not entitled to the housing subsidies afforded to the majority of Singaporeans.

    He says: 'As long as they do not get direct help from the Government, let them use their own method to get a share of land wealth. Their impact is very limited anyway, as they can buy only one flat each.'

    Given the paucity of statistics, it is hard to say whether investors are driving up the prices of resale flats. Perhaps it is time for the HDB to start tracking home ownership patterns on this front.
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