Million-dollar Public Housing in Singapore: A Look at Recent Developments

By SUSAN TEO

Last year and the start of this saw the public and semi-public housing landscape in Singapore experiencing a furor with the exorbitant prices that some HDB and HUDC flats are fetching on the open market.

Most recently in January, a second million-dollar HDB flat was born when an executive maisonette in Bishan was sold for a hefty S$1.01 million.

This broke the previous record of an executive maisonette at Block 149 Mei Ling Street in Queenstown which changed hands for S$1 million in September 2012. A high-rise unit in a 16-story block, its unobstructed view and proximity to the MRT have been cited as reasons for its record-breaking price. At that time, it also sets the record for the highest per square feet (psf) price at S$619. The three-bedroom flat, that comes with a study, was built in 1995, and has an area of 150 square metres. With a cash premium of S$195,000, while not the highest seen, it is still well above the median COV – normally below $100,000 (HDB InfoWeb) according to figures released by HDB.

Trailing behind, just a week before the Queenstown deal was closed, is a Bishan maisonette which changed hands for S$980,000 with a cash premium of S$200,000 despite its simple furnishings. The main selling points of this flat are its unique roof terrace and roomy interior of 1,800 square feet. It is also near to amenities and transportation networks.

Apart from the above two sales, last year also saw other pricey transactions. In May in Toa Payoh, an executive flat changed hands for S$910,000.

Meanwhile, HUDC (Housing and Urban Development Company) also witnessed a blip in prices.
HUDC (Housing and Urban Development Company) are semi-public housing with the possibility of being privatised from 1995. So far, 12 out of the 18 HUDC estates across the country, have been successfully privatised. HUDC was first built in the 1970s and 1980s to meet the lifestyle aspiration of the middle class. All are on 99-year lease. There are larger that the typical HDB flats. The average size of a HUDC is 1,650 square feet, whereas a five-room HDB flat averages1,200 square feet. However HDB stopped churning out these spacious flats in 1997.

In spite of the older facilities in HUDC, two HUDC maisonettes along Shunfu Road set records when they were sold for over S$1.2 million each. One unit was sold in July 2012 for a whopping S$1.28 million or approximately S$761 per square feet. While the other, in the same area, earned the seller of the 1,668 square feet flat the sum of S$1.22 million in 2011. Buyers of HUDC are often attracted by the spaciousness and en-bloc potential of the flats. Thus far, five of the privatised HUDC estates have been sold en-bloc.

Last year, the sky-high prices of these flats stirred up a minor frenzy, that prompted National Development Minister Khaw Boon Wan to urge the public to look at the“larger picture” and consider such prices as outliers. Property analysts agree that more million-dollar deals could be sealed for flats with exceptional features in prime locations. A case in point is The Pinnacle@Duxton – an award-winning HDB residential complex, that boosts a sky garden and superior interiors, among other unique features and facilities. All, including Mr Khaw, foresee seven-figure flats when the five-year Minimum Occupation Period (MOP) is met in a few years' time for this residential complex.

Another category of flats that will likely breach the $1 million mark is executive maisonette, fueled by HDB announcement on October 2012 that it will not be building any more of such flats. Already before this announcement, according to the Straits Times, in 2012 half of the eight units that crossed the S$900,000 selling mark were executive maisonettes.

Only two months into 2013, but 16 HDB flats are already sold for S$900,000 and above, with just over half being 5-room flats and the rest executive flats. 3 of these flats are only 11 years old and under. The newest is a 5-year-old 5-room flat in Jalan Membina. Its attraction lies in its proximity to Tiong Bahru MRT station and the city.

HUDC once again lead in crossing the million-dollar mark. Of the 4 HUDC sold in the two months, 3 went for over S$1 million, with the highest priced at S$1.25 million. All the 3 HUDC estates, where these units are located in are undergoing privatisation.

Table 1 illustrates the resale prices of the 20 HDB and HUDC units that are transacted at S$900,000 or more this year.

Table 1

HDB Town	Flat Type	Lease Commencement	Resale Price	Resale Approval Date
Bendemeer Rd	Executive	1994	$918,000.00	Jan-13
Bishan St 13	Executive	1987	$940,000.00	Jan-13
Bishan St 13	Executive	1987	$1,010,000.00	Jan-13
Bishan St 22	Executive	1992	$901,888.00	Feb-13
Bishan St 22	Executive	1992	$938,000.00	Jan-13
Bishan St 23	Executive	1992	$902,000.00	Jan-13
Geylang East Ave 1	Executive	1987	$900,000.00	Jan-13
Holland Dr	5 Room	1975	$920,000.00	Jan-13
Jln Membina	5 Room	2008	$925,000.00	Feb-13
Jln Membina	5 Room	2003	$930,000.00	Jan-13
Marine Cres	5 Room	1975	$935,000.00	Jan-13
Marine Dr	5 Room	1977	$910,000.00	Jan-13
Marine Ter	5 Room	1975	$905,000.00	Jan-13
Queen'S Cl	5 Room	1996	$900,000.00	Jan-13
Strathmore Ave	5 Room	2006	$901,888.00	Feb-13
Tg Pagar Plaza	5 Room	1977	$965,000.00	Jan-13
Hougang Ave 2	HUDC	1990	$1,065,000.00	Jan-13
Hougang Ave 2	HUDC	1988	$960,000.00	Jan-13
Hougang Ave 7	HUDC	1986	$1,040,000.00	Jan-13
Shunfu Rd	HUDC	1986	$1,250,000.00	Jan-13

Source: HDB Resale Flat Prices



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SIBOR vs. SOR Based Home Loans in Singapore

SIBOR vs. SOR Based Home Loans in Singapore from Property Buyer Singapore

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A Quick Guide to Approval-in-Principle (AIP) for Home Mortgages

By SUSAN TEO

Approval-in-principle (AIP) for home loans, or mortgage prequalification, are conditional approval. AIP can be sought for loans of private residential properties or HDB flats. Such loans are known as pre-approved loans. The time between submitting an application for an AIP and knowing the outcome can be as fast as 15 to 60 minutes. The validity period of the AIP varies between 14 to 30 days. During this period, financial documents have to be submitted to obtain a formal offer. After which, a Letter of Offer will be issued if the loan is approved. If the required documents are not submitted within this period, you can still re-apply for the AIP.

Having an AIP lets you know the loan quantum you are eligible for and the monthly repayment amount.

An AIP is non-binding for both the applicant and the financier; therefore you are allowed to change financiers even after obtaining an approval-in-principle loan from the financier. You may even change loan package with the same financier that you have obtained the AIP from.

If you are confused about AIP, you can have a FREE discussion with a Singapore home loan consultant.

Why you should have an AIP?

 

Narrow down the property search

Having an AIP lets you zero in on the property you know you can afford to buy. Thus you will not be wasting time viewing properties that you later find to be out of your budget when you apply for that loan. This also explains why some property agents only work with buyers who already obtained an AIP.

Fast commitment

Being certain that you can afford that property allows you to commit immediately when you have found your ideal property. There is no waste in time between obtaining the loan and closing the transaction. Indeed during that interval, some other buyers may beat you in buying the property.

Forfeit of booking fee

To prevent other buyers from buying, you may choose to sign the option to purchase (OTP)
and lay down the booking fee, before you have obtained the loan.

But this may not be the best course of action as you may not be able to obtain an ideal loan with a favourable rate, or even if you do it may be with a lower loan quantum. In the latter case, the deal may fall through if you do not have sufficient cash or CPF fund to top up the shortfall.

Should the deal fall through, you will have to forfeit part or all of the booking fee (The booking fee and forfeit amount will depend on whether it is a private house or HDB flat and if it new or resale).

In another scenario, you may be able to obtain the maximum loan-to-value ratio (LTV), but the valuation of the property has fallen during the interval in which you had signed the option and obtained the loan.

For example, the purchase price you agreed on is $1.5m, but when you have obtained the loan the valuation of the property has dropped to $1.2m. Assuming that you are eligible for a 80% LTV, you thought you could obtain financing up to $1.2m, but because of the lower valuation you can only secure $960,000. If you do not have the means to make up for the $240,000 difference, you cannot seal the transaction. However, such situations are extremely rare and only happen during financial crises.

Things to be cautious about

As an AIP is provisional, the bank still can reject the application if there are any changes to your financial status. So avoid taking other loans or changing jobs before the Letter of Offer is issued.

Just because an AIP is provisional does not mean you should randomly select a bank from which to obtain an AIP, thinking you can secure the same loan quantum from other banks later. That particular bank may be offering uncompetitive rates and loan features. And you may later discover that you are not eligible for the same quantum from other banks.



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