Saturday 21 January 2012

Balloting rules for BTO HDB flats set to change - Second-time buyers may benefit

More flats expected for second-timers
Industry players look to 15 to 20% of launches
By Daryl Chin, The Straits Times, 20 Jan 2012

THE promise of more help for second-time buyers of Housing Board flats could come in the form of additional units being set aside for them, say industry players.

This increase could hover anywhere between 15 to 20 per cent of new project launches, up from the current 5 per cent, they add.

National Development Minister Khaw Boon Wan announced this week that he would be concentrating on this group of buyers, who already own a HDB flat.

The shift was due to a stabilisation of the first-timer application rates in the latest build-to-order (BTO) launch this month, when there were 1.5 applicants for every flat. This was slightly down from 1.6 in November last year.

Comparatively, there are about 24 second-time applicants for every unit on offer.

Of every project, 95 per cent of the units are set aside for first-time home buyers while second-timers have to contend with the remaining 5 per cent.

PropNex chief executive Mohamed Ismail reckons the allotment for this group could go up to as much as 20 per cent.

'It is unlikely to be higher than that, as first-timers are a higher priority with greater needs and consequences than second-timers, who already have a roof over their heads,' he said.

He estimates that this move could reduce the demand from second-timers to about four applicants per flat.

Dennis Wee Group spokesman Lee Sze Teck estimates a more modest percentage of 15 per cent.

'This is because the Government needs to be mindful that too drastic a change will destabilise the resale market and the mass-market segment of the private residential market,' he said.

But that does not mean subscription rates will drop immediately, he noted.

'More people will come forward as they are attracted by the better chances. But the rates should drop within a year.'

This move would be good news to second-timers, who are typically residents of three-room flats looking to upgrade to bigger units.

Mr Muhamad Iskandar, 32, is one such example.

He and his wife and three children are finding life in his three-room flat in Tampines a squeeze.

He bought his flat six years ago, before he had kids.

The sound technician has been trying for a BTO flat for the past year, but has not had any luck.

'With a growing family, my top priority is giving my children more living space so a four-room flat would be nice.

'But that's been a dream so far,' he lamented.

Others, like Mr Joseph Ng, feel that the percentage could be higher still, perhaps even 40 per cent.

The 48-year-old businessman is at the other end of the spectrum and is looking to downgrade to a smaller flat after his import business folded.

'It is tough for people like us,' said Mr Ng, who lives in a four-room flat in Hougang with his wife, two children and his mother.

'We are stuck with an asset that we cannot sell because we have not secured a new home yet. And a resale flat is out of the question due to the high cash premium.'

Other second-timers The Straits Times spoke to called for a reduction of the resale levy.

This is a fee paid by the buyer to the HDB when purchasing a second subsidised flat, and can range between $15,000 to $50,000, depending on the flat type.

The resale levy is meant to reduce the subsidy on the second discounted flat so as to maintain a fair allocation of subsidies dished out to first- and second-timer households.

However, Mr Lee pointed out: 'The resale levy should not be scrapped because it ensures fairness.'

Tweaks to the levy are not likely though, say experts.

Said Mr Ismail: 'Perhaps when the needs of first-timers are met, when there are more flats on offer than applicants, then the Government can look at helping second-timers more.'

Balloting rules for BTO Housing Board flats set to change
Second-time buyers may benefit, going by hint in Khaw's Nov blog
By Jessica Cheam, The Straits Times, 18 Jan 2012

The Housing Board may soon change its balloting system for new flats, with second-time home buyers likely to benefit.

National Development Minister Khaw Boon Wan said on Tuesday that he hopes to announce changes to the HDB's build-to-order (BTO) balloting rules for the next sales launch in March.

The Housing Board's first BTO project for the year was launched earlier this month and offered 4,000 new homes across Tampines, Choa Chu Kang, Punggol and Sengkang. The launch closed on Tuesday, with an application rate of 1.5 first-timers for every flat available.

Mr Khaw wrote in his 'Housing Matters' blog that this rate was 'not surprising', and was similar to the subscription rate of 1.6 seen in the HDB's November BTO launch.

'Both are good rates; they mean that practically all will get a chance to choose a unit,' he said.

As of Tuesday, the HDB had received 9,593 applications for the 3,633 flats offered, excluding studio apartments.

'Our goal to help young couples get their first homes is coming true. We can now move on to better help the second-timers,' Mr Khaw added.

The application rate for second-timers for the January BTO launch is 23.9, compared to 25.9 in the November one.

In a previous post in November, Mr Khaw had hinted that 'once we have cleared the first-timer queue, we can help the second-timers more'.

The BTO scheme provides the main supply of new homes in public housing, which covers about 80 per cent of the population.

Currently, 95 per cent of flats launched are set aside for first-time buyers, and the remaining 5 per cent are for second-time home buyers.

Property firm PropNex's chief executive Mohamed Ismail said that if such changes were to happen, they would be timely for the market.

Going by recent application rates - which have been below two for every flat in the past two launches - the market has stabilised, especially in the demand from first- timers, he noted.

'This is a clear indication that government efforts in increasing new home supply are working, and a lot of first-time home buyers who weren't successful previously are now getting homes,' he said.

If the HDB continues building at the current pace, there will be an increased supply in the market which first-timers may no longer be able to absorb, he added.

'So it's fair and timely, for example, to increase the number of flats for second-timers since demand is still very high in that segment.'

The HDB plans to roll out 4,110 new flats in March in Bedok, Bukit Batok, Bukit Panjang, Bukit Timah, Clementi, Geylang and Toa Payoh - part of the supply of 25,000 new homes for the year.

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