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Thread: Curbs against speculation hit HDB resale sentiment

  1. #1
    mr funny is offline Any complaints please PM me
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    Default Curbs against speculation hit HDB resale sentiment

    http://www.businesstimes.com.sg/sub/...79692,00.html?

    Published April 5, 2010

    Curbs against speculation hit HDB resale sentiment

    Agents report drop in number of purchase enquiries and applications

    By EMILYN YAP


    (SINGAPORE) Recent government measures to curb speculation in HDB flats appear to have affected sentiment in the resale market, at least for now.

    Wait and see: Some agents believe the lull is just a kneejerk reaction which will dissipate after buyers have had time to digest the news. They expect the holding back period to last two to three months, after which things would return to normal

    Property agents BT spoke to recount cases of buyers walking out of deals shortly after the new rules were announced. A few also observed a drop in the number of purchase enquiries or applications.

    The evidence is anecdotal and some agents believe that this is just a kneejerk reaction which will dissipate after buyers have had time to digest the news.

    'Every time there is a change of rules, people will wait and see where the market is heading - whether prices are coming down or going up - before they enter the market again,' said C&H Realty managing director Albert Lu.

    'Normally there would be a holding back period, maybe two to three months. After that things will be back to normal.'

    The government introduced a slew of changes to HDB rules early last month. Key among these was the extension of the minimum occupation period for non-subsidised HDB resale flats to three years. Previously, buyers with HDB loans had to stay 2.5 years in their flats before selling them, or just a year if they used bank loans or had no loans.

    HDB had found a growing proportion of flat owners selling their homes within three years of purchase. Many genuine home seekers were worried about speculation driving resale flat prices up.

    HSR executive director (agency) Jeffrey Hong said that resale transaction volumes for his firm remain healthy despite the rule change. But right after the news broke, 'a handful' of buyers who had signed the option to purchase form backed out of the deals, forfeiting at most $1,000 in option fees.

    Some might have expected resale flat prices to fall and decided to delay their purchases, he reckoned. But prices did not soften and his agents managed to sell the same flats to other people 'very quickly', he added.

    An agent who declined to be named made a similar observation - some home seekers were in 'active negotiations' with owners or had even agreed to buy the flats, but changed their minds on the day the government announced the new measure.

    Another agency head said that since the rule change, calls from potential buyers to his agents have fallen by as much as 50 per cent in some cases. The number of flat viewings has also dropped.

    HDB flash estimates for the first quarter show the number of resale transactions dropping to 8,500 from 8,926 in Q4 2009. But it is not clear when the decrease set in, and if the policy change had a role to play.

    Asked if last month's measures have affected the resale market, HDB told BT: 'It too early to say as these measures were announced just about a month ago.'

    There are other real estate agencies which say that the rule changes have had no impact so far. ERA Asia-Pacific associate director Eugene Lim noted that it is 'business as usual', while PropNex CEO Mohamed Ismail said that his firm has not seen any kneejerk reaction.

    Dennis Wee Properties director Chris Koh made similar observations. 'Genuine buyers don't really care if it is one year or three years,' he said, referring to the extended minimum occupation period.

    He added: 'Private property prices are too high today. Once the gap between private property and HDB flats widens...people have got no other option but to go to the HDB market.'

    According to government estimates, HDB resale flat prices were 2.7 per cent higher in Q1 than in Q4. But for private residential property, prices rose 5.1 per cent over the same period.

  2. #2
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    Default

    The Government also believes in PROPERTISM.

    PROPERTISM Rule No. 1 - Property prices always go up in the long term hence properties should only be bought and not sold.

    Read the text highlighted in red below, and then see my comments at the bottom of this post.

    The Straits Times

    Apr 7, 2010

    Govt wants to curb home owners from cashing out early

    THE Government is concerned about home owners cashing out from their flats prematurely and is considering ways to discourage them from doing so, said National Development Minister Mah Bow Tan.

    The review comes amid concerns over a growing number of home owners who sell their Housing Board (HDB) flats to pay off debts or buy luxury items - and then return to the HDB to seek help with housing.

    Mr Mah told The Straits Times on Monday: 'There are many different options that we have to look at, one of which is to see how we can transfer some of the subsidy that is given when the flat is purchased, whether we transfer it into his CPF for retirement or medical expenses or to buy another flat...to make sure they don't take it out as cash and spend it away.'

    But, he added, if the proceeds from selling the flat are used to buy another property, 'there will not be an issue'.

    'We are not concerned if they are substituting one house for another, it's only when they use it for all sorts of (other) things,' he said.

    Last month, Prime Minister Lee Hsien Loong expressed concern over the trend of people selling their flats for a quick profit with little regard for future housing.

    Some of these people have turned to Members of Parliament for help. Others have turned to the HDB or to relatives, while some have set up homes on beaches, he noted.

    More recently, home owners desperate for cash are reported to have pledged flats to moneylenders as collateral for loans. Mr Mah said these cases were 'cause for concern'.

    'So that's why we need to step up our education efforts, to emphasise that the HDB flat is not only a roof over their heads, but also a long-term investment.

    'It's not for short-term profit or speculation,' he said.

    He added that this is part of HDB's 'life cycle approach to housing' - where it subsidises flats and helps young couples get on the property ladder.

    The HDB also arranges upgrading and ensures that flats maintain their value, and finally helps people monetise their flat when they retire, he said.

    'But this works only if people do not cash out of their flats prematurely. If they were to sell their flats halfway through and use the money for various things, whether to start a business or to pay debts or spend on luxury items, then the whole concept doesn't work any more,' he said.

    The Government is worried that more people are doing that and not making other arrangements for housing, he said.

    Housing analysts The Straits Times spoke to say it is premature to predict what form new policies, if any, will take to tackle this challenge.

    Associate Professor Sing Tien Foo of the National University of Singapore's real estate department said some proportion of profits from the sale of HDB flats could be locked into Central Provident Fund accounts, just as the CPF Investment Scheme requires profits made from the investments to be returned.

    'But in our current hot property market, where significant gains can be made, locking up such monies may not be a popular idea,' he said.
    But he agrees that any such policy would ensure the safety of retirement funds for home owners.

    'If home owners cannot withdraw home sale profits, their consumption of other goods will likely have to be deferred, especially if they do not plan to buy another property,' he said.

    Mr Mah said the Government has not decided what actions to take, but is looking at different measures.

    'We have to find a way to make sure that this message of long-term investment is emphasised,' he said.

    JESSICA CHEAM
    What the Government is essentially saying is that there is nothing worth buying other than PROPERTIES!

    So the next time you are thinking of selling a property, ask yourself what (to quote Mr. Mah Bow Tan) all sorts of (other) things you need the money for?

    All sorts of (other) things, e.g. cars, holidays, noodles and donating to charity (as suggested by some other members here previously) can be financed directly from income and there is actually no need to sell a property.

    This exactly agrees with PROPERTISM Rule No. 1 that properties should only be bought and not sold - Unless en blocked then quickly buy a replacement property (which I have recently tweaked to "buy a replacement property even before the en bloc")

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