Market Updates

Some aspiring HDB resale flat buyers downgrading from private properties are abandoning their plans altogether.

Source: Straits Times

Dated:

Aspiring HDB resale flat buyers scramble to make new plans after property cooling measures introduced

First it was shock, then a mad scramble to make new plans. Some aspiring Housing Board resale flat buyers downgrading from private properties are abandoning their plans altogether, after a new slew of property curbs aimed at cooling the public housing market kicked in on Friday.

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Woodlands South Plains in Woodlands, one of the projects in the August BTO sales exercise which closed on Sept 5, 2022.

Source: Straits Times

Dated:

HDB ballot results for August BTO exercise delayed due to high number of applicants

Those who have applied for a flat in the Housing Board's August Build-To-Order (BTO) sales exercise will only be informed of their ballot result around mid-October, instead of September. The delay is due to a large number of applicants in the August launch, said HDB in response to queries from The Straits Times. HDB said it needs more time to verify all applicants' eligibility for a flat as well as for the various priority schemes and to conduct the computer balloting. More than 34,000 people applied in the August BTO launch, compared with around 23,000 applicants in the May BTO launch. BTO ballot results are typically released via e-mail about three weeks after applications close. The August BTO exercise closed at 11.59pm on Sept 5. Applicants were informed of the delay via e-mail on Friday, the same day fresh cooling measures were introduced to ensure flat buyers borrow prudently and moderate demand for HDB resale flats, prompting speculation online as to whether the delay was related to the latest round of cooling measures. There was also confusion online about whether successful BTO applicants will be subject to the measures. In response, HDB said the new measures do not apply to those who applied for a flat in the August BTO sales exercise. Successful applicants who wish to take out a HDB housing loan will continue to have their loan amount computed based on the prevailing HDB housing loan interest rate pegged at 0.1 percentage point above the prevailing CPF Ordinary Account interest rate, which is 2.6 per cent per annum from Oct 1 to Dec 31. The loan amount that successful applicants can take will remain at up to 85 per cent of the BTO flat price. When asked if the balloting timeline will be adjusted for future BTO launches, HDB said it is reviewing whether further adjustments are needed to the balloting timeline for BTO launches where a bigger flat supply is offered.

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Some buyers said the blanket policy is unfair to those who have genuine needs to downgrade.

Source: Straits Times

Dated:

'Where do I live for 15 months?': Extended wait-out period for HDB resale flat leaves some frustrated

Three weeks ago, estate officer Patrick Yew sold his one-bedroom condominium unit with the intention of buying a five-room Housing Board resale flat to live in with his ageing parents. But overnight, his plans have come crashing down. A fresh round of cooling measures, announced slightly after 11.40pm on Thursday and kicking in on Friday, includes a 15-month wait-out period for current and former owners of private residential property who wish to buy a non-subsidised HDB resale flat. Previously, they were allowed to buy an HDB resale flat on the open market if they sold their private properties within six months of the HDB flat purchase. Mr Yew, 48, who is going through a divorce, said: "I have already sold my condo, which was an investment property, and I'll leave my four-room HDB flat to my wife and two kids because they need a home. After the divorce, I'll have to move out, but where do I live for 15 months?" He said friends have offered him a place to stay but he does not want to trouble them. "I'm in hot water right now, " said Mr Yew, who experienced a drop in earnings and now makes around $2,700 a month, which he said makes renting difficult. He said he will appeal to HDB to waive the 15-month wait-out period on account of his divorce and personal circumstance. At least three other downgraders in similar situations told The Straits Times that they will appeal or abandon their plans to buy an HDB resale flat entirely. The authorities said current and former private property owners, regardless of age, who have extenuating circumstances such as financial difficulties may approach HDB to assess their situation. The 15-month period - albeit a "temporary measure that will be reviewed based on overall demand and market changes", said the National Development Ministry - is likely aimed at slowing the flow of hot money from private property owners who want to cash out and downgrade to an HDB property so that more money can be put aside for their retirement funds, said analysts. But some buyers said the blanket policy is unfair to those who have genuine needs to downgrade. Alumni relations manager Nurhadi Khan, 41, sold a four-bedroom plus study executive condominium unit in July when mortgage payments became too expensive with rising interest rates, and had planned to buy a four-room HDB resale flat with a lower monthly mortgage. "I acknowledge that the perception is that anyone who sells a private property will have a fair bit of cash proceeds and therefore pick better HDB resale flats by offering more money, but it is not true for everyone; certainly not for us, " said Mr Khan, who said he would appeal to HDB. "Here we are, trying to do the right thing and be prudent with our finances, but yet we're getting penalised for it and have to wait 15 months, which seems illogical. " On Friday, the Government also raised the medium-term interest rate floor used to compute the total debt servicing ratio to 4 per cent and further lowered the loan-to-value limit for HDB housing loans to 80 per cent from 85 per cent, itself a cut from 90 per cent in December 2021. This means the Monetary Authority of Singapore is using stricter criteria to assess borrowers' ability to repay, and therefore quality for a loan. Buyers will be able to borrow less than before. The moves come after the HDB resale price index increased by more than 5 per cent as at the end of the second quarter of the year, a growing sign of overheating in the property markets amid rising interest rates and a gloomy economic outlook. PropNex associate group director Alex Deven said some of his clients have exercised their Option to Purchase (OTP) but have not yet submitted their resale application to the HDB. With the new measures, they are subject to the 15 month wait-out period and may be unable to buy the flat. It is also unclear if they will get back their fees as the OTP is an agreement between the seller and buyer. In response to ST's queries, HDB said it will assess such situations on a case-by-case basis. Others have abandoned their plans of downgrading, said Mr Deven. "It's causing some concerns and we have been working through the night sorting out timelines and new budgets for our clients since the announcement, " he added.

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The latest round of cooling measures that kicked in on Friday aims to nip overborrowing.

Source: Straits Times

Dated:

Downgraders' 15-month wait will moderate demand for HDB resale flats: Desmond Lee

The 15-month wait-out period imposed on current and former private property owners will moderate demand for Housing Board resale flats and keep them affordable, especially for first-time home buyers, said National Development Minister Desmond Lee. This is because private residential property owners generally have more means to buy resale flats than first-time home buyers or existing HDB flat owners, said Mr Lee in video remarks on his ministry's YouTube page on Friday evening. "Some may not even need to take loans to complete their purchase. They therefore tend to pay higher amounts of cash over valuation (COV) when they buy resale flats, " he said. COV refers to the difference between the sale price of a resale flat and its actual HDB valuation. The difference can be paid for only in cash by the buyer. From Friday, private home owners must wait 15 months after the sale of their current home before they can buy a non-subsidised HDB resale flat. Exceptions are made for those aged 55 and above who are moving from a private property to a four-room or smaller HDB resale flat, a two-room flexi flat or a community care apartment intended for seniors. HDB will also, on a case-by-case basis, exempt those with genuine housing needs or those who face extenuating circumstances regardless of their age, said Mr Lee. "We intend for this measure to be temporary. We will review this, depending on overall demand and market changes, " said Mr Lee, referring to the 15-month wait-out period. The latest round of cooling measures aims to nip overborrowing as both HDB resale and private home markets show growing signs of overheating. It comes just nine months after the last tranche of measures was implemented. Two big moves to tighten the maximum amount that can be taken for home loans kicked in on Friday. The first is raising the medium-term interest rate floor used to compute and assess borrowers' abilities to repay, and therefore qualify for, a loan. The second is lowering the loan-to-value limit, which means buyers can borrow less than before from HDB to finance their home purchase. Noting that some have expressed concerns that the lowering of the loan-to-value limit places a larger burden on first-time and lower-income families looking to buy a home, Mr Lee said: "This is not the case. "This move is not expected to affect first-timer and lower-income home buyers significantly, as they may receive housing grants. . . and tap their CPF savings to pay for the flat purchase. " Mr Lee said the move is to better protect home buyers by borrowing prudently and not overstretching themselves. "This helps reduce the risk of them facing future difficulties in servicing their home loans amid the uncertain economic outlook and rising interest rate environment, " he added. Mr Lee said the moves come at a time when market interest rates have risen significantly over the last year, compared with the years of exceptionally low interest rates from 2013 to 2021. "This will help them avoid difficulties in servicing their long-term home loans, as we think mortgage interest rates are likely to rise further in future, along with US interest rates, " said Mr Lee. Since the last round of cooling measures in December 2021, housing prices have continued to gain pace, causing some anxiety about affordability, especially among young families looking to buy their first home, added Mr Lee. Acknowledging that rising home prices have been a concern for Singaporeans, Mr Lee said the latest measures, coupled with the ramp-up in new flat supply, will help to moderate prices and meet strong demand. "We will continue to monitor the property market and ensure that they remain relevant and in line with economic fundamentals, " he said.

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The new property cooling measures will take effect from the November BTO launches.

Source: Straits Times

Dated:

askST: Will property cooling measures affect August BTO applicants?

New property cooling measures were introduced on Sept 30 to cool the heated Housing Board resale and private housing markets. They include a 15-month wait for private home owners who have sold their homes and looking to buy HDB resale flats, and a tightened loan-to-value (LTV) limit for HDB loans from 85 per cent to 80 per cent. A higher floor rate for the total debt servicing ratio and mortgage servicing ratio for property loans granted by private financial institutions and HDB were also introduced to address overborrowing. The Straits Times answers questions about the cooling measures. No, the LTV limit for HDB housing loans will remain at 85 per cent for successful applicants in those launches. This means buyers will have to fork out a down payment of 15 per cent of the flat's purchase price in cash or Central Provident Fund savings. Such applicants who have not applied for an HDB loan eligibility letter will also not be subjected to the new interest rate floor of 3 per cent for computing the HDB concessionary housing loan amount. The new measures will take effect from November BTO launches, which will offer about 9,500 BTO flats in towns such as Bukit Batok, Kallang/Whampoa, Queenstown, Tengah and Yishun. The wait-out period applies to private home downgraders who submit the complete resale application - both the buyers' and sellers' portions - from Sept 30. Previously, downgraders could buy an HDB resale flat on the open market if they sell their private property within six months of the flat purchase. The 15-month wait-out period will not apply to seniors and their spouses, both of whom must be aged 55 and above, who move from their private property to a four-room or smaller resale flat. The authorities said the wait-out period is a temporary measure taken to moderate demand, and will be reviewed based on overall demand and market changes. The 15-month wait-out period will apply. A buyer pays an option fee of between $1 and $1,000 in cash to the seller to "reserve" the property. The fee serves as part of the purchase price and is non-refundable. Within the option period of 21 days, the buyer can exercise his OTP, which means he has legally agreed to buy the flat. The option-exercise fee to buy the flat should not exceed $5,000 when the option fee is included. After the buyer exercises his OTP, both buyer and seller decide when to submit their respective portions of the resale application to HDB. But it is unclear if private home downgraders who have exercised their OTP and are now subjected to the wait-out period will get back their fees as it is an agreement between the seller and buyer. In response to ST's queries, HDB said: "Affected resale flat buyers may approach HDB for assistance, and we will assess their situation on a case-by-case basis. " Yes, the 15-month wait-out period will apply in this case. Both owners have to be at least 55 for the wait-out period to be waived when moving from a private property to a four-room or smaller resale flat. If the couple wants to move to a five-room or bigger resale flat, such as an executive apartment or maisonette, the 15-month wait-out period applies.

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With interest rates set to rise further, fresh limits on home loans to encourage more prudent borrowing came as little surprise.

Source: Straits Times

Dated:

Cash-rich private property downgraders, en bloc sellers targeted in new property curbs

Just nine months after property curbs were imposed to keep private residential prices from running ahead of fundamentals, a new slew of property curbs on Friday took aim at the public housing market, which had been largely spared in the previous round. This comes as hot money from private property downgraders flowing into the public housing market, coupled with pandemic-related disruptions in the construction sector, helped fuel a 12.7 per cent increase in Housing Board resale prices in 2021, and a further rise of 5.3 per cent in the first half of 2022.

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Buyers, including private home downgraders, who snapped up larger million-dollar flats helped fuel a 12.7 per cent increase in HDB resale prices in 2021.

Source: Straits Times

Dated:

Larger HDB resale flats to bear brunt of new property cooling measures; may drive up rents

The latest round of property cooling measures is a necessary and inevitable move to nip overleveraging in the bud. There are already growing signs of overheating in both the Housing Board resale and private home markets amid rising interest rates and a gloomier economic outlook.

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The cooling measures come after interest rates have risen significantly and are likely to continue rising.

Source: Straits Times

Dated:

Stricter borrowing criteria for property buyers, 15-month wait for private property owners moving to HDB flats

The maximum amount of money home buyers can borrow to purchase their homes will be tightened with immediate effect, so that borrowers avoid future difficulties in servicing those loans. The cooling measures come after interest rates have risen significantly and are likely to continue rising, the Monetary Authority of Singapore (MAS), Ministry of National Development (MND) and Housing Development Board (HDB) said in a joint statement. The authorities will take several measures to ensure home buyers borrow within their means and to moderate demand in the property market. These will take effect from Sept 30. For property loans granted by private financial institutions, MAS will raise the medium-term interest rate floor used to compute the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR) by 0.5 percentage point. TDSR refers to the portion of a borrower's gross monthly income that goes towards repaying all monthly debt obligations, while MSR, applicable to loans for HDB purchases, refers to the portion that goes towards repaying all property loans. This means that MAS is using stricter criteria to assess borrowers' ability to repay, and therefore qualify for, a loan. This will apply to loans for the purchase of properties where the option to purchase or sale and purchase agreement is granted on or after Sept 30. The actual interest rates charged for mortgages will continue to be determined by the private financial institutions. Stricter criteria will also apply when assessing housing board flat buyers' eligibility for a HDB concessionary housing loan. From Sept 30 onwards, an interest rate floor of 3 per cent for computing the eligible loan amount for HDB flats will be introduced. This means that the interest rate used to compute the eligible loan amount for a HDB housing loan will be the higher of 3 per cent per annum or 0.1 percentage point above the prevailing CPF Ordinary Account (OA) interest rate. The new 3 per cent interest rate floor will apply to fresh applications for an HDB Loan Eligibility (HLE) letter received on or after Sept 30. There will be no impact to existing HLE applications received by HDB before 12am on Sept 30. The interest rate for the HDB housing loan will remain unchanged at 2.6 per cent per annum from Oct 1 to Dec 31. The loan-to-value (LTV) limit for HDB housing loans will be lowered from 85 per cent to 80 per cent. This means that buyers will be allowed to borrow up to 80 per cent of the flat value compared to 85 per cent before. In other words, they can borrow less than before. The lower LTV limit will apply to new flat applications for sales exercises launched and complete resale applications which are received by HDB on or after Sept 30. To moderate demand in the HDB resale market, a wait-out period of 15 months for current and former owners of private residential property to buy a non-subsidised HDB resale flat will be imposed from Sept 30 onwards.  Currently they are allowed to buy a HDB resale flat on the open market if they sell their private properties within six months of the HDB flat purchase. Former private property owners refer to those who had disposed of a private property prior to submitting an application to buy a resale flat. The agencies said this is a temporary measure taken "to moderate demand and ensure that resale flats remain affordable for flat buyers, especially for first-timers". The measure will be reviewed based on overall demand and market changes, they added. It comes after the HDB Resale Price Index has increased by more than 5 per cent as at the end of the second quarter of this year. The wait-out period for private property owners who are first-timers and wish to apply for the CPF Housing Grant and Enhanced CPF Housing Grant for their resale flat purchase, remains unchanged at 30 months. The wait-out period will also not apply to seniors aged 55 and above and their spouses who are moving from their private property to a 4-room or smaller resale flat. These seniors can continue to buy 2-room Flexi flats on short lease and Community Care Apartments, if they are aged 65 and above, from HDB. In addition, current and former private property owners, regardless of age, who face extenuating circumstances such as financial difficulties, may approach HDB for assistance, the agencies said. HDB will assess their situation on a case-by-case basis, they added.

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Built in the 1980s, Serene Centre comprises 30 retail/F&B units, 10 apartment units and carpark facilities.

Source: Straits Times

Dated:

Serene Centre launched for sale via tender at $120 million

Serene Centre, a prime mixed-use development at the corner of Bukit Timah Road and Farrer Road, will be launched for sale via tender for the first time on Friday at a reserve price of $120 million. Built in the 1980s, the freehold four-storey commercial/residential development in 10 Jalan Serene comprises 30 retail/F&B units, 10 apartment units and carpark facilities, and is owned by a single family owner, according to marketing agent Cushman & Wakefield. Located near the Botanic Gardens MRT interchange station, Serene Centre sits on a 32,225 sqft site area with gross floor area of 47,475 sqft. Under the 2019 Master Plan, the site is zoned as "commercial/residential" and eligible for purchase by foreigners. The tender will close at 3pm on Nov 14. "This is an old asset and the seller doesn't want to put in more money to redevelop the property. They have also been receiving unsolicited offers from investors, and are therefore going through a competitive tender exercise to try to get the best offer, " Mr Shaun Poh, executive director of capital markets at Cushman & Wakefield, told The Straits Times. "Flanked by the nearby Cluny Hill/Park and Nassim Road good class bungalow clusters and the Botanic Gardens, we expect the asset's location and attributes will be appealing to developers and investors. The buyer can enjoy immediate rental income with a full occupancy and rental upside. "Alternatively, investors can consider a full redevelopment of the property for strata sale or revamp it through an Asset Enhancement Initiative. For instance, the 10 apartments can be converted into serviced residence or a co-living concept, subject to approval, " he added. Meanwhile, the collective sale tender for Sultan Plaza, a 45-year-old commercial building, at a lower reserve price of $325 million, is expected to close on Oct 26, if the requisite 80 per cent mandate from owners for the lower price is obtained. The 52,471 sqft commercial-zoned site comprises 211 commercial units and 33 offices, totalling 244 strata lots. "We just need one to two more units to cross the 80 per cent threshold, which will happen very soon, " Mr Sieow Teak Hwa, managing director of marketing agent Teakhwa Real Estate, said on Wednesday. Sultan Plaza relaunched in September at $325 million, after a previous tender at $360 million closed on June 28 with no buyers. Its first attempt to sell en bloc in 2019 was at $380 million. At $325 million, owners of the shops stand to get between $147,000 and $41.8 million, while the office owners will get $560,000 to $1.85 million, Mr Sieow added. The proposed reserve price will translate into a land rate of $1,545.80 psf plot per ratio (ppr), including estimated costs to buy the state land, the differential premium and the lease top-up premium. It will average down to $1,504.30 psf ppr after factoring in an 8 per cent bonus gross floor area (GFA). The site can be redeveloped for mixed use, with the proposed commercial GFA to not exceed 40 per cent of total GFA. Serviced apartments can be considered for residential use. It can also be redeveloped into a 700-room hotel with shopping and commercial space. There is no additional buyer's stamp duty payable for the commercial site.

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There were 114 shophouse sales in the first six months of the year worth $938.8 million in all.

Source: Straits Times

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Soaring demand continues to push up prices of shophouses in Singapore

The owner of a shophouse near Bugis has walked away with a remarkable profit of $4.5 million after owning the property for just 14 months - as stark a sign as any of just how hot the market is for these properties. The 1,149 sqft freehold unit at 148 Arab Street was bought for $5.5 million in February 2021 and offloaded in April 2022 for $10 million.

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