Property in Singapore: Not penalising private home owners - Instead, says Mah Bow Tan, Govt making things more equitable for both them and HDB flat owners, alike

Wednesday, September 15, 2010

Not penalising private home owners - Instead, says Mah Bow Tan, Govt making things more equitable for both them and HDB flat owners, alike

SINGAPORE - The recent cooling measures have resulted in an "anomaly", Non-Constituency MP Sylvia Lim told Parliament yesterday, noting that while a Housing and Development Board (HDB) flat owner can own private property after the Minimum Occupation Period (MOP), but a private property owner has to sell his property within six months of buying an HDB flat.

In response, Minister for National Development Mah Bow Tan said the Government was not penalising private property owners but making it more "equitable" for both HDB and private property owners.

He pointed out that in the past, subsidised HDB flat owners could not buy private property until after five years, whereas a private property owner could own both private and HDB properties at the same time.

Mr Lim Biow Chuan, MP for Marine Parade GRC, wanted to know why private property owners who bought HDB flats, after the new rules kicked in, would have to dispose their private property when they intended to live in their HDB flats during the MOP of five years.

Mr Mah said there were people who wanted to "have the best of both worlds" - keeping their private property and renting it out while living in an HDB flat. However, he added that there was "a genuine need from first-timer couples for HDB resale flats and I think we should let them have first crack at it".

About 3 per cent of HDB flat owners - or 24,000 flat owners - own both private property and HDB flats.

Mr Mah added: "If you already own private property, please don't, at this point in time, compete with the others to buy HDB resale unless you are genuinely downgrading."

The Minister said many flat owners caught up in the "upgrading fever" in the nineties were hit by the financial crisis.

Mr Mah reiterated that the new measures did not disadvantage upgraders or investors as there was ample public and private housing supply in the pipeline. The measures were timely to encourage them to exercise greater financial prudence and think carefully about their purchases, he said.

As for MP for West Coast GRC Ho Geok Choo's question on whether there would be enough executive condominiums (ECs) and flats under the Design, Build and Sell Scheme (DBSS) to cater to the needs of those with a monthly income of $8,000 to $10,000, Mr Mah said HDB was ramping up the supply of land sites for DBSS and ECs.

HDB plans to release land sites for about 7,000 DBSS flats and 8,000 ECs in 2010 and 2011.

In two years, HDB will triple the current stock of 4,000 DBSS flats and double the current stock of 10,000 ECs that have been launched for public sale since the start of the scheme.

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GOOD CLASS BUNGALOWS

Buying the ultimate home

With only about 2,400 units of good class bungalows in the market, almost any GCB would be a rare find.

By Arthur SimPublished: August 13 2009,The Business Times
THEY are wealthy and successful people who can probably afford to buy any home they want, but many of them are being drawn towards good class bungalows (GCBs). There are only 39 designated GCB areas in Singapore and Binjai Park is one of them.

However, these areas are not all equal. Some GCB locations are more prestigious than others. For instance, the current asking price for GCB land in the Nassim area is between $1,500-$2,000 per square foot (psf) whereas in Chestnut Drive, GCBs have been known to have transacted at around $550 psf.

There are also pros and cons to buying either an old bungalow or a newly built one. 'Some old GCBs have unique architectural features and come with a rich heritage. Buyers, however, have to be prepared to set aside some money to refurbish and upgrade the building and fit it out with modern conveniences,'

New buildings, he says, can be tailored to specific tastes but also be expensive. But what usually pushes up prices is the location. A martial arts movie star who picked up a GCB at Binjai Park for $19.8 million at around $871.36 psf earlier this year appears to have gotten a good buy. It was reported that the seller of the house had incurred a loss of $1.2 million on the deal, having bought the property in early 2007 for $21 million, or $924 psf. The selling price for a newly built GCB will generally be higher than that of an old GCB. 'The choice normally depends on whether the buyer is price sensitive,'. A new house might take as long as two years to build although it is more likely to be built to the owner's precise specifications.

If one is looking for exclusivity, the most expensive GCBs are generally in the Nassim and Lady Hill areas. This is followed by those in the Tanglin vicinity such as the Rochalie, Bishopsgate and Chatsworth areas.On the prices, GCBs in the Tanglin vicinity range from $1,200-$1,400 psf for the top of this category.

'Other popular GCB areas are in the Swettenham, Pierce, Dalvey, Cluny Park areas where prices can range from $1,100-$1,300 psf', '1,000 psf is the standard price for an average GCB. Prices have been moving up over the last six months. Permanent residents are permitted to buy landed property, but only with permission from the government. Foreigners cannot easily buy a GCB or any other landed home here as the government restricts foreign ownership of residential property. However, foreigners who take up Singapore citizenship may buy landed property. The exception to the restrictions is the gated residential enclave of Sentosa Cove, where ownership rules were eased to allow foreigners who are not permanent residents to buy landed homes or land plots, though permission is still needed.

Apart from some restrictions on ownership, one of the common misconceptions when buying a GCB is that some buyers unknowingly pay a premium for a home that actually falls outside the designated GCB areas. 'Some buyers think that as long as a bungalow has a land area of 15,070 sq ft, it is considered a GCB, not knowing there are only 39 designated areas,' he added. Before buying any home, it is also useful to do some checks. For instance, it is useful for a surveyor to be called in to assess and ascertain the site boundary for issues such as encroachment. A structural surveyor or engineer can also be engaged to assess the structural integrity of a house, especially if it is an old or conserved bungalow. It is also important to check with the relevant authorities about possible drainage and road reserves as this could affect the the boundary setbacks. Finally, the terrain, shape of the site and frontage are other physical characteristics that are important, especially if one is going to build a new house. But with only about 2,400 units of GCBs in the market, almost any GCB would be a rare find. 'The majority are owned by the who's who - and are seldom placed for sale in the market. On the contrary, there's an increasing pool of buyers made up of high net worth individuals, GCB collectors as well as permanent residents who are looking to buy GCBs for their own use,' he adds.

GCB buyers are a discerning group of investors who also have a different view on what makes a good investment. 'Yields are not part of the investment criteria - which is typically less than 2 per cent,' said Mr Han. Instead most see GCBs as a good long-term asset class of investment, 'especially in land-scarce Singapore where land value appreciates over time'. And Mr Han believes that the outlook for GCBs is also good.