New Flats' Prices Increase By 30%

[zirhk3355 1]

The Electric New Paper :

HDB says prices of new flats pegged to current resale prices, flats in outer areas cheaper

Why is brother's flat cheaper?

Brother buys flat last year. Now, he wants to buy one

Same block, same floor, same size, so...

HIS brother had bought a new four-room HDB flat for $280,000 under the Balloting Exercise last February.

By Desmond Ng

21 February 2008

HIS brother had bought a new four-room HDB flat for $280,000 under the Balloting Exercise last February.

Earlier this month, he applied to buy a similar unit there, only to find out that the price had gone up to $364,000 - an increase of about 30 per cent.

The unit was the same size and was even on the same floor and block in Bukit Merah.

The buyer, a manager who wanted to be known only as Andy, felt that the price increase did not make sense.

'I was shocked when I saw the price online. Even my brother couldn't believe it. If there's no change in construction cost since the block is already built, why did the price go up?

'In general, the prices of flats in that area have increased, but not by such a huge jump.

'What's the explanation for the hike?' he asked.

HDB said that it is not appropriate to compare the twoprices as there is a one-year difference between the two sales launches.

In the pricing of new flats, HDB said it takes into account the market values of equivalent resale flats in the area.

The HDB resale market did exceptionally well last year, and prices increased by 17.5 per cent compared to year 2006.

Andy, who is in his 40s, decided to apply for a four-room flat in Bukit Merah despite having to pay more than his brother.

He is currently living in a HDB flat in the central part of Singapore.

'I've little choice. I want to live near my mum, who is living with my brother,' he said.

But another home-owner we spoke to in that estate is more than happy with the increased value of her new flat, even though she will not be able to sell it for five years.

Housewife Joyce Soh, 37, saw her flat's value go up by more than 20 per cent in a year.

She had bought the five-room flat last year and moved in three months ago.

She paid $408,000 for a 1,184sqft unit on the 24th floor.

Today, a similar-sized unit in the same block is going for about $502,800 in the latest Balloting Exercise, although it is on a lower floor, according to information from HDB's website.

POPULAR AREA

Ms Soh, who relocated from Taman Ho Swee, said she is not surprised by the increase in price.

'This location is very central and it's near the city,' she said.

'Prices of other HDB flats in this area are also some of the highest, too,' she said.

Bukit Merah is one of the most sought-after HDB estates due its proximity to town.

Record prices have become the norm in this estate and in nearby Queenstown.

Last June, a five-room flat in Bukit Merah was sold for $720,000.

In January, an executive flat in nearby Queenstown was sold for a whopping $890,000 - one of the most expensive Housing Board flats in the country.

PropNex CEO Mohamed Ismail said it is unusual for prices of newflats to increase by such a huge percentage within a year.

He said it could be because flatprices for the Balloting Exercise (BE) last February were decided before the HDB market started to pick up during that quarter.

Mr Ismail also said that the HDBresale price increased by only 2 per cent for the whole of2006.

Last year, HDB resale prices rose by 1.3 per cent in the firstquarter and soared to 6.6 per cent in the third quarter.

Mr Eric Cheng, executive director of HSR Property group, said that market valuation for resale flats has gone up at least 30per cent compared to last year.

Mr Cheng said: 'If resale prices increase, logically, new flat prices will increase too.

'And prices in Bukit Merah are also higher because of location and amenities.'

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[applefreak 1]

aiya, it's like that one loh

hdb always say their price affordable

but seriously, newly weds with combined income less than $8,000 how to afford flats that cost half a mil???

my area ulu ulu SK also saw an increase of at least 10% in 3mths

only 3mths difference hor :furious:

[TYM 0]

I have always ponder this policy of pegging new hdb flats to current resale prices? What is the rationale?

Edited February 21, 2008 by TYM

[slejes 0]

Gov going to remove the sand subsidy, concerte and steel prices expected to rise by 20% due to globle demand and rise in transport cost (cos oil price goes up). With all that in, the new flat price confirm will increase in 2008....

Edited February 21, 2008 by slejes

[phoenix 0]

actually its a double edged sword. on 1 hand u have newly weds who probably have combined incomes of less then 8K. but on the other hand u have those who married late (probably already earning more then 8K combined) who are complaining about the 8K ceiling...and have been talking about when the 8K ceiling needs to be reviewed.

i think no matter how, the lower income (younger newly weds) will 'suffer' eventually...sad but true. when eventually the ceiling does rise to 10K, naturally prices will go up, coz demand will go up as now those who previously don't qualify (beyond 8K ceiling) now can.

thats why, sometimes be careful what u ask for.

Edited February 21, 2008 by phoenix

[jaCKY777 0]

If 1 were to buy a branded sports/luxury car at >$1 mil,

over time, its value wil depreciate.

If 1 were to buy a property (landed / pte / hdb),

overtime, its value wil appreciate.

So now, can any1 tel mi how 2 slowly earn big bucks?

In SG, we can say dat owning a property is having a valuable asset dat may las 1 a lifetime.

1 can dun hav $$$, but he canot dun hav a place to stays.

If he has more than 1 a place 2 stay, then wat can he do 2 e rest of his properties?

My england not beri e chim, hope those reading, get wat i'm tryin 2 say.

Below is wat i'd posted earlier regarding e recent Balloting Exercise, fyi ->

RenoTalk Forums > Family Community > My Neighbourhood > Toa Payoh Blk 79 Kakis

Hey neighbours,

- for those who dun like my post, pls skip & read e nex post, to prevent being hurt.

- for those who njoys gossip (jus like me), feel free 2 carry-on reading.

As of 18 Feb 08 midnight, total nos. of applications received for Bi-monthly Sale of 4-Rm & Bigger Flats Sector C = 10,240 (figures taken frm web)

Below is e gossip i'd heard frm a elderly man (retired, noting 2 do) ->

If 1 application gota pay $10, then it wil b $10 x 10240 = $102,400 collected in total

This is on-top of e recent increase in selling price

Total nos. of units available, regardless of type, size, location = 278

Dat means for every unit, there r 36.835 applications.

If 1 manage 2 get a unit @ $350k, 5 yrs dn e rd if he sells, chances is dat he may b making a profit of $50k - $100k or more. Dis applies 2 those speculating ppl with '$$$' backgrnd, not taking any loan.

Therefore e odds -> 1:36.835 for $50k - $100k or more.

If 1 were 2 buy 4D @ $5 Big & $5 Small, e chances of striking 1st price is 1 in 9999.

If he strikes 1st price, e winnings r $10k for Big, $15k for Small = $25k

Therefore e odds -> 1:9999 for $25k max.

From these 2 assumptions, which is e 1 with higher winning odds?

I gues within 'these 10240 applicants', there bound to have these type of speculating ppl i'd mentioned.

Dun tel mi SG suddenly got so many newly wed, wed sometime ago or goin 2 wed couples?

[applefreak 1]

firstly, no one 'owns' a hdb flat

we are all leasing from hdb, and the flat can be confiscated anytime we contravene the by laws

for property used as investment, the returns (rental) are usually calculated at around 8%pa

that's quite high for something that has capital gain as well

like what one of the property giant said - there's one thing that they can't make anymore, that's land

as for the sudden spike in new flat application, that's due to the absurd COV nowadays

previously COV is around $5k to $20k, compared to the $50k - $100k, young couples how to afford???

guess singaporeans are forgetting the lessons learnt by SK / Punggol EA owners who paid $450k for the flat

once it dropped to $300k nia, although the area was touted (at that point of time) the latest lifestyle hub

let's cross our fingers that we are not affected by the US recession

[zirhk3355 1]

I have always ponder this policy of pegging new hdb flats to current resale prices? What is the rationale?

Other that profiteering, what other reasons??

No increase in building costs; not as though they are building a new block with higher costs, but its an existing BLOCK that is already built!

And the worse thing is that increasing new flats' prices will definitely push up the resale market; those who think that is a good thing, think again. Sell high, buy high. There is no way you can profit from a better pricing for your current flat, unless you move to another location or downgrade.

[raincole 0]

If HDB don't peg to current mkt situation, when there is recession, wouldn't new flat be outpriced to resale. So it is logical to do so.

[TYM 0]

Other that profiteering, what other reasons??

No increase in building costs; not as though they are building a new block with higher costs, but its an existing BLOCK that is already built!

And the worse thing is that increasing new flats' prices will definitely push up the resale market; those who think that is a good thing, think again. Sell high, buy high. There is no way you can profit from a better pricing for your current flat, unless you move to another location or downgrade.

There is nothing wrong with profiteering, but this is something a government should not do. Resale market, free market forces, demand and supply, whoever can pay will pay. But new hdb flats peg to resale prices, i don't see the justification, especially if it is already built.

There is so much talk by the government to help singaporeans with the rising cost of living, mayb they can start from here.

If HDB don't peg to current mkt situation, when there is recession, wouldn't new flat be outpriced to resale. So it is logical to do so.

If prices are not adjusted upwards during booming times, then there is no need to adjust downwards during recession, just price it at a realistic level (perhaps using $8k income ceiling as a guide). Yes, I admit that this is too ideal a scenario but even if there should be an increase, a 30% is still too ridiculous!

[zirhk3355 1]

If HDB don't peg to current mkt situation, when there is recession, wouldn't new flat be outpriced to resale. So it is logical to do so.

Erm, beg to differ here.

If HDB priced a new 4-rm flat at $250K and you also intend to sell your 4-rm flat (similiar layout, area, location, etc) in the resale market, would you sell your flat at below $250k??

So its not possible that new flats would outprice the resale ones...

[zirhk3355 1]

There is nothing wrong with profiteering, but this is something a government should not do. Resale market, free market forces, demand and supply, whoever can pay will pay. But new hdb flats peg to resale prices, i don't see the justification, especially if it is already built.

In the past, existing flats' owners were profiteering, ie selling their flats at high prices then go get new flats. The govt says this is wrong, which I agree, but how did they solve it? They came up with a crooked reason that in order to stop this, they have to price new flats at resale prices, on top of all the resale levies already imposed.

Which is nonsensical, because it is yet another catch 22 situation that the govt put themselves into, akin the ERP situation. Now the property is booming, resale prices go up, new flats prices also go up; those who want to buy, cannot afford anything! Then too many flats how? Change this policy, change that policy, so that more people can buy. The results? We see various 'class' of HDB flats and also closing the gap with private developments; now we have $700K+ HDB flats, what's next??

The whole idea of public housing and catering to the masses is hence defeated. New buyers scrambled to dump their life-savings into a small pigeon hole, while existing owners worry every other day if the property bubble burst, resale value drops and makes them lose money. EVERYONE is affected by this; do you have a CHOICE?

In the first place, HDB flats being public housing, should never be made a 'free market' and influenced by 'market forces'. Resale prices should be controlled, perhaps pegged at the existing owners' buying price + accrued interest +/- another 10% to cover reno and other costs, or something like that.

Then, more land banks should be released to private developers and increase the supply of low-end ECs and condos. Those who think they can afford to 'play' the market, then go buy private developments. Scared of burning your fingers, want to play safe or just want a simple roof over your head? No problem; we will always have the CHOICE of getting a HDB flat for you.

This way, HDB serves its PRIMARY purpose of catering to the low and mid-income masses, and only then those public policies like income ceiling, family nucleus, fiance-fiancee, single, etc would will continue to make sense.

Phew...haha...yet another ranting from me...

[Brainstorm 0]

Gov going to remove the sand subsidy, concerte and steel prices expected to rise by 20% due to globle demand and rise in transport cost (cos oil price goes up). With all that in, the new flat price confirm will increase in 2008....

Agreed, if the cost price of new flats are increasing, those existing new flat that are build a year or two ago will also adjust prices upward... Just like shopping center selling their goods, if cost price of new stock item goes up and they need to adjust prices, they will adjust all prices including the exisiting stock....

[jaCKY777 0]

In the past, existing flats' owners were profiteering, ie selling their flats at high prices then go get new flats. The govt says this is wrong, which I agree, but how did they solve it? They came up with a crooked reason that in order to stop this, they have to price new flats at resale prices, on top of all the resale levies already imposed.

Which is nonsensical, because it is yet another catch 22 situation that the govt put themselves into, akin the ERP situation. Now the property is booming, resale prices go up, new flats prices also go up; those who want to buy, cannot afford anything! Then too many flats how? Change this policy, change that policy, so that more people can buy. The results? We see various 'class' of HDB flats and also closing the gap with private developments; now we have $700K+ HDB flats, what's next??

The whole idea of public housing and catering to the masses is hence defeated. New buyers scrambled to dump their life-savings into a small pigeon hole, while existing owners worry every other day if the property bubble burst, resale value drops and makes them lose money. EVERYONE is affected by this; do you have a CHOICE?

In the first place, HDB flats being public housing, should never be made a 'free market' and influenced by 'market forces'. Resale prices should be controlled, perhaps pegged at the existing owners' buying price + accrued interest +/- another 10% to cover reno and other costs, or something like that.

Then, more land banks should be released to private developers and increase the supply of low-end ECs and condos. Those who think they can afford to 'play' the market, then go buy private developments. Scared of burning your fingers, want to play safe or just want a simple roof over your head? No problem; we will always have the CHOICE of getting a HDB flat for you.

This way, HDB serves its PRIMARY purpose of catering to the low and mid-income masses, and only then those public policies like income ceiling, family nucleus, fiance-fiancee, single, etc would will continue to make sense.

Phew...haha...yet another ranting from me...

Hey zirhk3355,

Personally,

- i find wat u had written make sense. It is very true olso.

- Ur suggestions olso sound reasonable.

- If stick 2 e old system but with further restrictions & rules, it wil stil work fine.

- Be it gahment or commoner, both olso benefits.

- With e new system, it had defeated e 'Affordable Public Housing' motto which was started frm day 1 (1960s).

- Earlier days, ppl look 4ward 2 'buy' a flat, due 2 hygiene, modernization, urban planning etc.

- Nowadays, ppl 'buy' flat is 4 e sake of buying. Some even reluctant or cant afford, cos once u 'buy', u r in debt. e accumulated interest over e loan period, is much higher than 'loan shark', esp with e current pegging of New Flat Prices against Resale Flat Prices.

i'm not gd in writing, s compare 2 ur post.

Wonder u got interest 2 compete for 'political postion'?

If u do, i definitely wil support u.

[zirhk3355 1]

Agreed, if the cost price of new flats are increasing, those existing new flat that are build a year or two ago will also adjust prices upward... Just like shopping center selling their goods, if cost price of new stock item goes up and they need to adjust prices, they will adjust all prices including the exisiting stock....

Well, merchants' basic motivation is to earn profits and answer to their shareholders/investors; it is understandable.

But what irks me is while the HDB/govt is telling us that they are not out to make a profit and doing things for 'our own good', at the same time, they increase prices for the existing stock of flats.

Wonder u got interest 2 compete for 'political postion'?

If u do, i definitely wil support u.

Alas, I am nothing more than an armchair critic; not up to it for any political position lahh...