FOR IMMEDIATE RELEASE (30 August 2010)
New measures to ensure public housing serves the public’s needs
Further to the Government’s announcement at last night’s National Day Rally speech to introduce more public housing flats within a shorter time frame over the next few years, HDB has announced new measures to stabilize prices in the public housing market and ensure more opportunities and homes for first-time owners.
One of the main changes was a revised Minimum Occupancy Period (MOP) of five years for the resale, subletting and private property purchase by HDB flat owners. Prior to this announcement, the MOP for the owners who wanted to resell or sublet their flats was three years, while there were no restrictions on the purchase of private property. In addition, these measures apply to non-subsidies flats, which means the same restrictions for flats subsidies by CPF grants now apply across the board.
The second main change is that any owner of private property who buys a non-subsidies flat now has to dispose of his/her/their private property within six months of the Date of Purchase of the HDB flat. There was previously no such imposition.
“The raising of the MOP to five years for the resale and subletting of the flats is mainly to enforce owner-occupation,” says PropNex CEO Mr Mohamed Ismail. “The new restriction of a five-year MOP before the purchase of private property is to encourage those with the ability and intention of purchasing private property in the near-term to opt for that instead of buying a HDB flat.
“This new restriction still allows Singaporeans to invest in property,” he points out. “They are merely encouraged to exercise greater financial prudence by not juggling two mortgages at once.”
Mr Ismail feels that the mandate to dispose of one’s private property when purchasing a HDB flat will have great ramifications within the industry.
“Based on our recent records,” he reveals, “about 10% of all HDB resale purchases are by private property dwellers. These may be investors who will now not be able to purchase HDB flats and keep their private property for investment purposes.” PropNex Realty holds a 30% market share of the HDB resale market, as of 2Q10.
“This significant measure definitely aims to reduce speculation and short-term investment,” he continues, “in an effort to check prices in the HDB resale market. HDB has always been very firm on their stand that HDB flats are meant to serve the housing needs of the mass populace, and these measures, particularly the mandatory need to dispose of one’s existing private property within six months of a non-subsidised flat purchase, make that very clear.”
While these new measures take immediate effect (from 30 August 2010), Mr Ismail foresees the number of HDB resale transactions for 2H10 dipping by about 10% half-on-half from 1H10’s 17,598 to 15,800, with resale transactions for 2011 down by about 20% from 2010’s total estimated of about 34,500, mainly due to the absence of speculative near-term investors.
Furthermore, while he does not expect any drastic drop in HDB resale prices anytime soon, Mr Ismail forecasts that COV prices are likely to dip by about 10% by the end of the year before dropping 20% in 2011. Thereafter, he says, we can expect a further 30% decline by 2013 from today’s levels.
For enquiries, please contact:
Mohamed Ismail (CEO) 9487 1414
Adam Tan (Corporate Communications Manager) 9006 8726