Saturday, March 30, 2013

Second-timers rush for three-room units

The Straits Times  |  MARCH 28, 2013
They are heavily oversubscribed; but first-timers prefer bigger Punggol flats

Punggol's bigger flats proved to be the top draw for those looking for their first Housing Board home, when the latest Build- To-Order exercise closed last night.

But when it came to second- timers, it was the 306 three- room units in Bukit Batok and Sengkang that saw fiercer competition.

As 85 per cent of the flats in these non-mature towns were reserved for first-timers, it meant that the three-room units made available to second-timers were oversubscribed by more than 20 times.

The Housing Board had launched 3,898 flats across the three estates last week. Overall, there were about three applicants vying for each flat.

Property analysts told The Straits Times that those going for three-room units were likely older downgraders whose children have left. A mortgage cap introduced at the start of the year could also have deterred some applicants from seeking larger units, they added.

"The limits on how much income one can use to service a loan would restrict buyers in their choices," said DWG spokesman Lee Sze Teck. Since January, mortgage payments to banks have been capped at 30 per cent of a borrower's monthly household income, and 35 per cent if they take a Housing Board loan.

The previous cap for Housing Board loans was 40 per cent, and there were no restrictions on bank loans before, allowing some home buyers to spend up to half their wages on their mortgages.

Under the new rules, a buyer with a monthly household income of $5,000 who takes a 20- year loan with a 3 per cent interest rate can borrow up to $270,000. Previously, with half his monthly income going to the mortgage, he could have taken a $450,000 loan.

This could make the difference between, say, buying a $255,000 three-room flat at the Housing Board's SkyPeak@Bukit Batok and a $532,000 five-room unit.

Still, it did not stop the four- and five-room flats in the latest BTO exercise from being oversubscribed by nearly three times.

The 470 Punggol units, costing up to $348,000 for a four- roomer and $428,000 for five- roomer, pulled in around four applicants per flat.

Analysts believe young couples were attracted to the promise of waterfront living at the estate once known for rubber plantations and pig farms.

"Punggol has a good story and features waterfront living in some parts. Young couples could also see it as an asset that is likely to appreciate in later years," said Mr Nicholas Mak, research head at property firm SLP International.
A report last October showed median resale prices of flats at Punggol rising at 3.7 per cent, higher than the national average of 2.3 per cent.

Mr Lee, the DWG spokesman, noted that some buyers might be waiting for the upcoming measures before making a purchase.
Recently, National Development Minister Khaw Boon Wan announced plans to cut prices of flats in non-mature estates by 30 per cent, though details have yet to be revealed.

The Housing Board will launch close to 8,000 flats in May, when the quota of new two- or three-room flats for second-timers will double from 15 per cent to 30 per cent. It will include some 3,000 leftover flats that have either been built or are close to completion - allowing buyers to move into their new homes much sooner.

Ms May Chang, 23, an aspiring home owner, plans to wait. She said: "Many issues about HDB flats seem to be in a flux right now. I would rather make an informed decision when the dust settles than make a hasty one that I might regret."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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