THE Central Provident Fund (CPF) board will keep the interest rate for members’ CPF savings in their Ordinary Account at 2.5 per cent for the third quarter of this year.

According to a joint statement by CPF and HDB on Monday, the computed CPF interest rate derived from the major local banks’ interest rates for the three-month period - Feb 1 to Apr 30, is 0.74 per cent per annum.

But the board will pay the higher rate of 2.50 per cent from July 1 to Sept 30 as the CPF Act provides for a minimum rate of 2.5 per cent per annum.

An extra one per cent interest will be also paid on the first $60,000 of a member’s combined balances, with up to $20,000 from the Ordinary Account (OA).

The extra interest from the OA will go into the member’s Special or Retirement Account for retirement savings.

The Housing Development Board’s concessionary interest rate for its mortgage loan - pegged at 0.1 percentage point above the CPF interest rate for the Ordinary Account - will remain unchanged at 2.6 per cent per annum for the third quarter.

As for the interest rate for CPF’s Special, Medisave & Retirement Accounts (SMRA), the new rate for July to September will announced in June.

This is because the SMRA interest rate, currently at 4 per cent, is calculated based on the 12-month average yield of the 10-year Singapore Government Security plus one per cent.

Source : Straits Times - 12 May 2008

Bogus contractors are apparently making their rounds at Woodlands Drive.

Residents said contractors claiming to be from the town council and the Housing and Development Board (HDB) have been knocking on their doors.

The contractors showed some form of identification document to justify their claims before recommending that residents change their door locks.

They cited a rise in theft cases in the area.

HDB said changing door locks is not part of any of its upgrading or maintenance programmes.

It said flat owners will be informed beforehand if maintenance or rectification works need to be done in their flat.

Flat owners will also be notified on who will carry out the works and when such works will be done.

Residents are advised to call the police if the contractors continue to harass them, and if they suspect they could have been misled by these so-called HDB-appointed contractors. - CNA/ac

Source : Channel NewsAsia - 4 May 2008

Flats much sought after because of spillover demand from private homes market, but agents say rents are unlikely to rise much more
 
The rental market for Housing Board flats remains hot, with rents up in the first quarter as more home owners apply for permission to rent out whole flats.

Rents for some executive flats in Queenstown have gone as high as $2,900 a month, a price previously seen only with private apartments.

Property agents say that although prices are flattening out, rental demand for HDB flats remains strong, thanks partly to spillover demand from the private homes market, where rents surged dramatically last year.

More Western expatriates can be found renting HDB flats these days. However, demand for HDB flats still comes mainly from Malaysian, Chinese and Indian nationals working in Singapore, says Mr Eugene Lim, an assistant vice-president of ERA Realty Network.

‘Although HDB rentals have gone up, HDB flats are still among the cheapest forms of rental housing for them,’ he said.

‘Demand will continue to rise mainly because of the continuous influx of foreign talent, especially with the upcoming casino and international events such as Formula One,’ said Mr Steven Tan, the executive director of the residential division at OrangeTee.com.

Nevertheless, rentals are unlikely to surge from current levels. ‘We are starting to see some resistance,’ said Mr Tan.

In Toa Payoh, which is close to town, first-quarter median rents ranged from $1,400 for a three-room flat to $1,780 for a four-roomer and $2,150 for a five-roomer, going by HDB data.

A little farther up north, first-quarter median rents in Ang Mo Kio started at a lower $1,300 for a three-room flat and moved up to $1,880 for a five-roomer.

While Tampines might be some distance from town, median rents for flats in the regional commercial hub ranged from $1,480 for a three-room flat to $1,950 for a five-roomer.

How much a flat can fetch depends on its location. Those next to MRT stations tend to command more, agents say.

Five-room flats in Choa Chu Kang fetched a median monthly rent of $1,480; those in Bukit Merah, $2,000.

Executive flats, some of which used to fetch monthly rents similar to those for five-room flats, now go for more, starting from $1,530 and going as high as $2,900.

‘HDB rentals are quite high now. I think this is the limit,’ says property agent Germaine Ng. ‘I already saw resistance two months ago. Fewer tenants are coming to the market.’

Even if rents remain at current levels, HDB flats would make attractive investments, albeit only for those who are eligible to rent them out. Flat owners can rent out their entire unit after occupying it for three years. This minimum occupation period goes up to five years if they bought the flat with a subsidy or housing grant.

For instance, a five-room flat in Ang Mo Kio might be worth just $400,000 but it could fetch a monthly rent of $1,800, which would give a yield of 5.4 per cent.

‘This is a very good yield considering that rental yields for private homes usually fall below 4 per cent,’ said Mr Lim.

This explains why more and more people want to rent out entire flats. In the first three months of this year, 3,581 flat owners - most of them with three- or four-room flats - were given approval to rent out their flats.

Last year, 12,808 sub-letting approvals, of which about a third were for three-room flats, were given. In 2006, 8,544 approvals were given.

HDB flat owners can apply online for sub-letting approvals. Those who want to rent out just the rooms do not need HDB approval to do so, but they must continue to live in the flat and comply with other sub-letting conditions.

QUICK TIPS

How you can improve your rentals

• The flat should be in move-in condition, with a fully fitted kitchen, washing machine and television set. Air-conditioning will be a plus.
• Keep the flat simply decorated. Do give it a fresh coat of paint if it needs one.
• Flats with interiors that resemble a condominium’s can fetch more. A three-room flat near Tanjong Pagar MRT station was rented out at $2,600 a month after the owner spent $40,000 to renovate it.

‘When you walk into the flat, it feels like a condo,’ says agent Germaine Ng.

Source: Agents

What you need to know as a landlord

• While you can rent your flat to several people, there is a limit you must observe.
• HDB allows a maximum of four occupiers in one- and two-room flats, six in three-room flats and eight in four-room or bigger flats.
• Make sure your sub-tenants do not further sub-let the flat, which is not allowed.
• If you rent your flats to foreigners, make sure they entered Singapore lawfully and are remaining here lawfully. Otherwise, you might be guilty of harbouring immigration offenders.

Source: HDB

Source : Sunday Times - 4 May 2008

The Housing and Development Board (HDB) will launch on Wednesday a land parcel at Sengkang East Avenue for executive condominium development under the Reserve List System.

HDB said the 17,000 square metre plot will have a permissible gross floor area of over 51,000 square metres.

Property consultants estimate that the 99-year lease site could fetch about 450 to 500 units, with a land price of S$110 to S$130 per square foot per plot ratio.

As developers are still fairly confident of the mass market property segment, market watchers said the land parcel will attract moderate interest from developers, with up to six bids for the site. - CNA/ms

Source : Channel NewsAsia - 29 Apr 2008

I DON’T know if the Government knows this. Many first-time buyers of Housing Board flats are treating the balloting system for new units as a chance to strike the lottery.

You can tell them apart from genuine home buyers because they will faithfully put in an application whenever new flats are offered for sale in mature estates.

Occasionally, they may test the waters by applying for flats in new townships but will find excuses to reject them should they be successful in getting a queue number.

Like seasoned 4-D punters, they are undeterred by repeated failures to land the Big Prize - a new flat in much sought-after towns such as Queenstown, Toa Payoh and Telok Blangah.

A colleague’s son has balloted unsuccessfully on more than 10 occasions for flats in mature estates. He’s not compromising, preferring to wait for the next offer of new flats in such estates instead of buying a resale flat or booking a Build-To-Order (BTO) flat under the mainstay programme for new public housing.

BTO flats are less popular as they tend to be in outlying areas like Sengkang.

A desire to live near their parents or workplace is often cited by couples as a reason for wanting a flat in a mature estate. Some even resort to creative ‘threats’, arguing that the Government’s effort to encourage Singaporeans to marry early and have more children is undermined by its failure to provide them with affordable homes in a location of their choice.

I remember feeling incredulous when reading a story in this paper last November, ‘No (HDB flat) = No (wedding)’, in which a couple said they delayed their marriage plans because they could not get a new flat in Ang Mo Kio or Toa Payoh.

‘Were they for real?’ I wondered.

To be sure, some reasons are valid, such as wanting to live near aged parents who are in poor health. But for the majority, I suspect the real reason for being picky boils down to dollars and cents.

Landing a new flat in a mature estate and selling it after five years can yield several hundred thousand dollars in profit. Who would want to give up this once-in-a-lifetime windfall by accepting a flat in a less desirable address?

While the HDB allows upgraders to buy a second new flat, in reality, their chances of doing so are very slim due to priority for first-timers.

Consider this: In 1996, my wife and I bought a five-room flat for $160,000 in Woodlands. In the same month, my parents-in-law balloted successfully for a four-room flat in Holland Village. Coincidentally, the price tag was also about $160,000.

Last December, I sold my flat for $300,000. During that same period, one four-room flat in my in-laws’ block fetched $550,000 while another went for $589,000.

This underlines once again the widely held belief that homes in prime locations appreciate in value faster than those in outlying areas.

Is it any wonder then that many first-timers stubbornly refuse to accept flats other than those in mature estates?

Also, the dice is loaded in their favour. Under the HDB priority scheme, first-time buyers and newly-weds get an extra chance in a future ballot every time they are unsuccessful in selecting a new flat.

Even so, competition is stiff. In February, the HDB received 9,900 applications for 278 surplus new flats in mature towns.

Some ingenuous buyers have tried to exploit the system to improve their chances.

There are anecdotes of first-timers applying for BTO flats they have no intention of taking up in the hope of accelerating their failure rate so as to enjoy a higher chance of success by the time flats in a desirable area are available.

If they are ‘lucky’ and get picked to select a BTO flat, they will just turn it down. After all, there is no penalty.

One couple, shortlisted for a BTO flat in Punggol last year, did not pick a flat despite having more than 400 units to choose from, according to the HDB. They subsequently applied for a BTO project in Yishun and complained publicly when they were not successful.

This lack of deterrence has prompted National Development Minister Mah Bow Tan to ask the HDB to review its application process to discourage such people.

One possible solution is to revert to the Registration for Flats System for BTO flats. Under this, buyers form two queues - one for first-timers and the other for upgraders. The queue for first-timers will move a great deal quicker.

Buyers who reach the head of queues will be invited to pick a flat. If they don’t, they will be considered dropouts and will have to start all over again if they wish to re-apply for a new HDB flat.

As an extra deterrent, the HDB might consider imposing a registration fee on new buyers who join the queue. This can be used to offset the purchase price if they subsequently select a flat.

In the past, the fee was $200 for first-timers and $600 for upgraders, excluding GST.

As for surplus flats in mature estates, the HDB should bar upgraders from buying them since they already have a home. This will leave the field open only to first-timers.

Do away with the complicated system of multiple chances for failed attempts and give all an equal chance in a ballot. After all, you don’t ask Singapore Pools to increase your chance vis-a-vis a novice just because you have not had a winning ticket after years of trying, do you?

As surplus flats are so few and applicants so many, treat them as what they really are - a sweepstake, with prized homes going to the lucky few.

THE GALL

One couple, shortlisted for a BTO flat in Punggol last year, did not pick a flat despite having more than 400 units to choose from, according to the HDB. They subsequently applied for a BTO project in Yishun and complained publicly when they were not successful.

Source : Straits Times - 28 Apr 2008

I REFER to the letters, ‘Raise income ceiling on HDB flats over $500k’ by Mr Song Yee Soon (April 16), and ‘Variety needed in HDB income ceiling rule’ by Mr Ng Ya Keng (last Thursday).

The Design, Build and Sell Scheme (DBSS) was launched to give choice to flat buyers who are prepared to pay for variety in housing designs and fittings.

In pricing new DBSS flats, private developers take into account the purchasing power of flat buyers within the income ceiling of $8,000 per month. If HDB raised the income ceiling, as suggested by Mr Song, developers could correspondingly set higher prices for DBSS flats.

HDB would like to remind buyers there is a wide variety of flats available, of different sizes, finishes and prices. DBSS is only one of many public housing options, including new HDB flats and resale flats.

On Mr Ng’s suggestion to raise the income ceiling, we would like to explain that about eight in 10 Singaporean families are currently eligible to buy subsidised public housing at the prevailing household income ceiling of $8,000. Households with incomes exceeding the income ceiling have many other housing options, including resale flats.

Mr Ng may wish to know only households with income not more than $2,000 and $3,000 are eligible to buy new two- and three-room HDB flats respectively. Eligible households earning below $4,000 per month may receive additional housing grants of up to $30,000 for flat purchases. This is to recognise the extra help needed by the lower-income group to own HDB flats.

HDB agrees with Mr Song that flat buyers should exercise financial prudence when buying an HDB flat. Currently, flat buyers taking HDB loans are required to undergo credit assessment and obtain a home loan eligibility letter from HDB, before they can commit to buy a new or resale HDB flat.

We thank Mr Song and Mr Ng for their feedback.

Lily Chan-Wong Jee Choo (Mrs)
Acting Deputy Director (Policy & Property) for Director (Estate Administration & Property)
Housing & Development Board

Source : Straits Times - 28 Apr 2008

House-hunting for soon-to-be-married Jolyn Toh used to be a discouraging affair as prices were out of her reach.

But things are looking up for the engineer.

Just six months ago, home-owners in Bukit Batok, where she is looking to buy an HDB flat, used to demand nothing less than $50,000 cash upfront.

In the last month, however, this has dipped to about $20,000 to $30,000. ‘This difference means my fiance and I can now afford a home before our wedding in July,’ said Ms Toh, 25.

New government figures released last Friday will bring cheer to those hunting for their dream Housing Board flat as they reveal that median cash-over-valuation (COV) prices in many popular estates like Marine Parade, Queenstown and Clementi are falling.

COV is the cash that buyers must pay a seller over and above a flat’s market valuation to secure the sale. For example, if a unit is valued at $250,000 and the seller will only part with it for $300,000, the COV will be $50,000.

It cannot be paid for by a bank loan or by money from a Central Provident Fund account.

Market watchers explained that the drop in COV was due largely to valuations of HDB homes rising sharply to reflect more accurately prevailing market prices.

Valuations of flats are made by a panel of HDB-appointed private valuers.

Agency boss Albert Lu of C&H Realty said valuers have started taking into account recent resale transactions, which have enjoyed robust growth, in their valuations.

This has led to the narrowing of the gap between valuations and COV prices, even as home prices continue to rise.

Take, for example, a five-room flat in Bukit Batok. In the fourth quarter of last year, its median price was $430,000, and the median COV was $41,000. Accordingly, valuation was $389,000, that is $430,000 minus $41,000.

In the most recent quarter, the median price went up to $450,000. However, the COV fell to $30,000, which meant that the valuer had valued the flat higher at $420,000.

A lower COV will help newlyweds, especially, get on the housing ladder. They now have to fork out less cash upfront and can take out HDB or bank loans to service the rest of the purchase.

Although HDB prices continued to rise 3.7 per cent in the first quarter this year, housing experts say the market could get a boost in coming months due to lower COVs.

‘With valuations going up, the COV is coming down and this makes it more affordable,’ said Mr Lu.

HDB prices rose 17.4 per cent last year, the highest in a decade. At the peak of last year’s spectacular property bull run - which saw record prices such as $890,000 for an executive flat in Queenstown - home-owners were asking for COV sums of more than $150,000 in some mature estates.

This, in turn, priced many newly-weds out of the resale market, who then turned out in droves to queue for new HDB flats.

In Clementi, for example, the median COV for July to September last year was a sky-high $155,000 for an executive flat. This had dropped to $75,000 in the fourth quarter last year, and is now a more reasonable $40,000 this quarter.

For a very ‘cash sensitive HDB market’, even a small difference in COV makes an impact and could see more people returning to the resale market, said Mr Colin Tan, Chesterton International’s head (research and consultancy).

PropNex chief executive Mohamed Ismail said that another reason for the decrease in COV could be that sellers’ expectations have moderated due to the recent softening of the property sector here, coupled with volatile global markets.

Mr Tan pointed out that HDB prices remained high and are daunting for lower-income families whose incomes have been stagnant. This makes new HDB flats, which are subsidised, the more attractive proposition.

But for couples like teacher Lynne Ng, 26, and her fiance, the dip in COV could not have come at a better time. ‘We were going to rent or live with our parents, but now it’s possible we’ll get a dream home of our own when we get married,’ she said.

Source : Sunday Times - 27 Apr 2008

Median COV was $21,000, compared to $22,000 in Q407

TRANSACTIONS of resale HDB flats fell 6 per cent from the fourth quarter of 2007 to 6,360 in Q1 this year, against the backdrop of rising asking prices and high cash-over-valuation (COV) demands.

‘With escalating resale prices and more and more COV transactions, we saw the resale market hit resistance in Q4 last year as HDB flat buyers do not have or are not willing to part with so much cash,’ said property agency ERA’s assistant vice-president Eugene Lim. ‘This resistance carried through to the first quarter this year.’

In Q4 2007, a total of 6,750 resale flats changed hands, which was itself a 13 per cent drop from Q3 2007.

HDB’s resale price index rose 3.7 per cent in Q1 this year compared with Q4 2007.

But this increase was lower than the 5.7 per cent quarter-on-quarter rise in Q4 2007.

The median COV of all resale flats in Q1 this year was $21,000, slightly down from $22,000 in Q4 2007.

In some estates, the drop was much larger.

The median COV of executive flats in Bishan, for instance, plunged $25,000-$45,000 in Q1 2008, and that of five-room flats in Marine Parade fell $15,000-$50,000.

On the resale price trend, PropNex CEO Mohamed Ismail believes an increase is sustainable in the long term and that double-digit growth this year is attainable, given the robust economy.

Mr Ismail reckons the falling COV reflects a smaller number of private property and en bloc downgraders in the market.

He expects the COV to stabilise at $20,000 islandwide for the year, as demand for resale flats increases and the number of surplus flats falls.

ERA’s Mr Lim also expects the resale market to remain healthy for the rest of the year, though price growth may be more measured.

‘For the whole year, we do not expect resale prices to increase more than 10 per cent,’ he said.

He noted that some demand for resale flats may be diverted to the increasing number of new flats coming on stream.

‘First-timers and those that can wait a couple of years are likely to go for new flats, as buying direct from HDB involves little or no cash outlay,’ he said.

HDB said yesterday it plans to offer 5,000 new flats under the Build-To-Order (BTO) system during the next six months.

Together with 1,100 launched in Q1, the planned BTO supply of 6,100 new flats for January to September will exceed the numbers of BTO flats launched in 2007 or 2006, which were 6,000 and 2,400 respectively.

Source : Business Times - 26 Apr 2008

ABOUT 40 people who have been made bankrupt and face trouble securing home loans from a bank or the Housing Board (HDB) have found a lifeline in the form of a new loan scheme.

Introduced in July last year by the HDB, these loans are designed to make it easier for bankrupts to find new homes and pay off their debts.

But loan applicants must first satisfy the HDB’s criteria, which include having the money to service monthly mortgage instalments while still satisfying creditors.

An HDB spokesman told The Straits Times yesterday that proceeds from the sale of an existing flat should be used to finance a smaller home.

‘To be realistic in determining what they can afford, buyers should consider their existing financial commitments.

‘(These include) allowances to support children and parents, payment towards utilities and transport,’ said the spokesman.

There were 25,961 undischarged bankrupts - people who are still paying off their debts - in Singapore as at the end of February this year, according to government statistics.

‘Purchasing a flat is a long-term commitment. Buyers need to plan carefully and secure financing before committing to the purchase,’ said the HDB spokesman.

Agreeing, housing agents said bankrupts wanting to downgrade must understand that selling and buying flats incur other costs such as conveyancing, agent and stamp fees.

Mr Eric Cheng, executive director of HSR Property Group, said one in every 30 clients he handles is a bankrupt wanting to downgrade his flat.

Their aim, he said, is to reduce their monthly mortgage instalments.

Mr Cheng said: ‘I tell them that the selling price must at least cover the loan they are getting from the bank or HDB. Their next move must be very prudent, so it’s better to engage a professional to help draw up a good financial plan.’

A bankrupt, who declined to be named, said the loan programme will help him reduce his financial burden.

There was no such provision when the 45-year-old engineering supervisor swopped his executive flat for a five-room flat in 2001.

‘I still have a job so I am able to service my loans for a five-room flat,’ he said. ‘Some people might even have to rent as they have no choice.’

Plan carefully

‘Purchasing a flat is a long-term commitment. Buyers need to plan carefully and secure financing before committing to the purchase.’ - HDB Spokesman

Source : Straits Times - 26 Apr 2008

Prices of HDB resale flats rose by 3.7 percent in the first three months of this year over the previous quarter.

The rise in the Resale Price Index (RPI) was lower than the 5.7 percent increase in the fourth quarter of last year.

Resale transactions fell by about 6 percent, from 6,750 cases in Q4 2007 to about 6,360 in Q1 2008.

The median Cash-Over-Valuation (COV) amount among all resale transactions in Q1 2008 was $21,000. This was a slight decrease compared with the COV of $22,000 in Q4 2007.

Going forward, analysts said the diminishing pool of en-bloc downgraders and uncertainties in the global economy will also come into play.

Donald Han, Managing Director, Cushman and Wakefield, said: “The longer you take to offer the property, your asking price and expected cash top up will reduce in accordance to the market demand. We might see a slight down take in terms of the COV, moving slightly down to even S$15,000, that might happen over next one to two quarters.”

14 per cent of resale transactions were conducted at or below valuation during the first quarter of this year. Still, market players are confident of a double-digit growth in resale flat prices in 2008.

But this will not be anywhere near the record of 17 per cent achieved in 2007.

On the supply of new flats, HDB said it plans to offer 6,100 Build-To-Order (BTO) flats for the first nine months of this year.

In the first quarter of this year, HDB launched about 1,100 new flats in two BTO projects in Punggol and Yishun. - CNA/ir/vm

Source : Channel NewsAsia - 25 Apr 2008